Abstract Performance of small and medium enterprises (SMEs) has been addressed widely in the literature. Both developed and developing countries are highly concerned about the growth and performance of SMEs. The literature exploring performance is abundant, however, has certain controversies. To identify the reasons behind those controversies, this study was conducted with the aim being to identify the mediating role of dynamic capabilities which are developed by entrepreneurial networks and entrepreneurial orientation. The study collected the data from a sample of SMEs based in Jordan which were connected through a closed network and were the part of groups. The data was collected via an electronic questionnaire, and100 SMEs were contacted and invited to participate in the survey on a purposive sampling basis. Structural equation modelling was applied to identify the direct impacts and the mediating impact. The findings identified that amongst the chosen firms, entrepreneurial networking has an insignificant impact; however, entrepreneurial orientation has shown a significant positive impact. Furthermore, the mediating role of dynamic capabilities was significant in both the relationships. The findings suggested that the sector should develop strong networks and should consider strategic alliances to gain competitive edge. Future researchers are guided to implement the same framework along with the dimensions of the variable.