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Purpose: Knowledge sharing enables a firm's absorptive capacity to reconfigure its dynamic capabilities to sense, track and recognise embryonic business opportunities. Entrepreneurial opportunity recognition triggers entrepreneurs to invest in and upgrade their knowledge practices to improve entrepreneurial performance. This study aims to examine the relationship between knowledge sharing and absorptive capacity on entrepreneurial orientation as well as the moderating effect of opportunity recognition and the mediating effect of absorptive capacity. Design/methodology/approach: A quantitative cross-sectional research design was applied to data from Algerian small and medium-sized enterprise managers in middle- to top-management positions. The final analysis using smart PLS included 246 respondents. Findings: Knowledge sharing positively influenced entrepreneurial orientation and absorptive capacity. In addition, the findings reveal that entrepreneurial orientation positively influences entrepreneurial performance, and opportunity recognition strengthens the relationship between entrepreneurial orientation and entrepreneurial performance. Entrepreneurial orientation and absorptive capacity have partial mediating effects. Practical implications: This study focuses on how firms create and share developed knowledge to enable absorptive capacity to fit a level of entrepreneurial orientation. This study validates the vital impact of opportunity recognition as a leading motivation for entrepreneurial orientation. The results highlight an important area of research and suggest that firms should focus on knowledge sharing to boost entrepreneurial outcomes. Originality/value: The notions of entrepreneurship, absorptive capacity and knowledge sharing are extended by building on dynamic capability theory. Knowledge sharing increases absorptive capacity, which drives superior entrepreneurial orientation outcomes. [ABSTRACT FROM AUTHOR]