To develop entrepreneurial orientation (EO), small and medium-sized enterprises (SMEs) need to possess managerial and organizational capabilities. In this paper, we posit that adaptive capabilities (AC) and network capabilities (NCs) are assets that allow an SME to distinguish itself and establish an entrepreneurial culture. We investigate the direct effect of AC on EO. Furthermore, we consider the mediating effect of NCs on the AC–EO relationship. The results show that a high level of AC fosters EO. In addition, NCs are shown to be influenced mainly by the SME's ability to cope with change and build relationships with external partners to detect entrepreneurial opportunities.
