Must-have or nice-to-have? Unpacking the necessity of entrepreneurial attributes and dynamic capabilities for MSME sustainability

Purpose This study investigates how entrepreneurial attributes influence Sustainable Performance (SP) through Dynamic Capabilities (DC). Grounded in Dynamic Capabilities Theory (DCT) and Resource Dependence Theory (RDT), it examines the roles of Entrepreneurial Business Networks (EBN), Entrepreneurial Orientation (EO), and Entrepreneurial Leadership (EL) in enhancing SP. Additionally, the study examines the necessary conditions of entrepreneurial attributes for attaining various levels of DCs, and of DCs themselves for achieving Sustainable Performance (SP). Design/methodology/approach A multi-method approach is employed, integrating Partial Least Squares Structural Equation Modeling (PLS-SEM) and Necessary Condition Analysis (NCA). Data from 294 manufacturing MSMEs in India is analyzed to assess both symmetric and asymmetric relationships. Findings Results indicate that EBN, EO, and EL significantly enhance DC. While EBN and EL directly improve SP, EO has no significant direct impact. However, DC mediates the relationship between entrepreneurial attributes and SP, highlighting its critical role. NCA confirms that entrepreneurial attributes, especially EL and EO, are must-have conditions for the development of DC, while EBN is a nice-to-have, and that DC, comprising sensing, learning, integrating, and reconfiguring capabilities, are themselves necessary (must-have) conditions for achieving SP. Research limitations/implications The findings offer actionable insights for MSMEs seeking to enhance sustainability. Entrepreneurs should prioritize the development of DCs, as they are essential for achieving SP. Policymakers and industry stakeholders can leverage these insights to design interventions that strengthen MSMEs' adaptive capabilities. Originality/value This study offers a methodological refinement and contextual extension by combining PLS-SEM (symmetric analysis) and NCA (asymmetric analysis) to differentiate between “must-have” (necessary) and “nice-to-have” (sufficient) conditions for DC and SP. It advances theoretical understanding by integrating DCT and RDT to explain the entrepreneurial determinants of SP.