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Purpose: The study aims to examine the causal relationships among knowledge-oriented leadership (KOL), open innovation (OI), knowledge infrastructure capability (KIC) and knowledge process capability (KPC). This study also explored the mediating role of knowledge infrastructure capability (KIC) and knowledge process capability (KPC) in the relationship between knowledge-oriented leadership and open innovation. Design/methodology/approach: The study collected primary data via a standardized questionnaire comprising a sample of 305 pharmaceutical and health sector employees in Pakistan. Hypotheses were tested through structural equation modeling. Findings: The results display the significant causal relationships among the variables and knowledge infrastructure and process capability and these significantly mediate the relationship between knowledge-oriented leadership and two-dimensional open innovation. Furthermore, this study found an insignificant effect of KOL on inbound open innovation. Limitation: The findings of the paper are based on the data collected from the Pakistan pharmaceutical and health sector. In future, to accommodate the issue of generalizability, the framework can be used for samples from other countries. Practical Implication: This study provides evidence that leadership is one of the most crucial sources that can aid in organizational effectiveness when dealing with knowledge by developing infrastructure and improving processes to enhance innovative outcomes. [ABSTRACT FROM AUTHOR]