Introduction: In today’s turbulent and knowledge-driven environment, knowledge-based companies must leverage capabilities that enable them to acquire, generate, and—most importantly—effectively combine knowledge in order to survive, remain competitive, and grow. This study aims to examine the role of the three core components of knowledge-based dynamic capabilities—namely knowledge acquisition, knowledge generation, and knowledge combination—on the performance of knowledge-based firms in Markazi and Hamedan provinces.

Methodology: This quantitative, applied, and survey-based study was conducted on a sample of 108 firms selected from a population of 265 knowledge-based companies. Data were collected using validated and standardized questionnaires in winter 2025. Data were collected using standardized questionnaires. To assess the validity of the questionnaire, expert opinions in the field of entrepreneurship were utilized. Reliability was evaluated using Cronbach's alpha and composite reliability. Data analysis was conducted using SPSS and SmartPLS software, applying the Partial Least Squares Structural Equation Modeling (PLS-SEM) method.

Findings: The findings revealed that only knowledge combination capability had a significant and direct positive impact on firm performance. In contrast, knowledge acquisition and generation capabilities did not directly affect performance but influenced it indirectly through knowledge combination. This underscores the full mediating role of knowledge combination and highlights the importance of integrating and reconfiguring knowledge resources to drive performance outcomes. Additionally, the study uncovered the hierarchical structure and interrelations among the KBDC dimensions. Knowledge acquisition positively influenced both knowledge generation and combination, while knowledge generation also significantly contributed to knowledge combination.

Conclusion/ Implications: Overall, the findings of this study confirm the existence of a hierarchical structure among the components of knowledge-based capabilities and underscore the mediating role of knowledge combination capability within the study’s integrated conceptual framework. The results indicate that mere access to or generation of knowledge is insufficient to create sustainable competitive advantage. Instead, it is the ability to combine knowledge that serves as a strategic mechanism for converting intellectual capital into superior performance and organizational success. For knowledge-based companies to achieve optimal performance, they must be able to systematically and purposefully integrate diverse internal and external knowledge in alignment with environmental demands. This combinative ability enables organizations to respond more quickly to market changes, identify and exploit innovation opportunities, and reconfigure their organizational structures and decision-making processes with greater agility. Therefore, investing in the development and institutionalization of knowledge combination capability can be regarded as a key strategy to enhance the competitiveness, adaptability, and long-term sustainability of knowledge-based firms operating in dynamic and uncertain environments.