PurposeLiterature survey shows that it is not clear how knowledge management capability (KMC) and ambidexterity capability affect entrepreneurial creativity (EC) and entrepreneurial intensity (EI) promotion. While empirical studies have emphasized the importance of these factors in improving business performance, the cumulative effect and self-reinforcing loops of these factors in improving firm performance have not been identified. In this regard, the study seeks to investigate how to increase the entrepreneurial capabilities of KMC, EI, EC and ambidexterity of food firms to improve their performance.Design/methodology/approachThe method of the present study is applied in terms of purpose and is quantitative in terms of data collection. In order to collect the data, a questionnaire was designed that contained the variables of the conceptual model of the research. This questionnaire was distributed among industrial and academic experts in the Iranian food industry. The method of data collection is an online cross-sectional survey, and the method of data analysis is structural equation modeling using Smart PLS software to analyze the conceptual model.FindingsThe present study is cross-sectional survey research that examines the impact of KMC, EC and EI on firm performance by considering the mediating role of organizational ambidexterity. The research study shows a positive impact of entrepreneurial capabilities as KMC, EI, EC and ambidexterity on performance. Accordingly, if a firm builds KMC and fosters EC, it can achieve ambidextrous innovation and thus enhance its EI and performance in the food industry.Research limitations/implicationsThis study highlights the knowledge-based view (KBV) in explaining the role of KMC on innovative capabilities and its influence on performance. Research findings shed light on the importance of KMC as a prerequisite for innovation strategy. The study has also established the mediating role of ambidexterity in entrepreneurial value creation. According to the results, small and medium-sized enterprises (SMEs)' performance is positively influenced by entrepreneurial capabilities as KMC, EI, EC and ambidexterity.Originality/valueThis paper gives insights into how SMEs can improve their performance to gain a competitive advantage by developing knowledge and creative ideas in line with entrepreneurial goals. In this regard, the food industry can adopt new strategies to reduce the impact of these challenges to achieve superior performance and competitive advantage.