<p>Using dynamic capability theory as an underpinning, the current research’s main objective is to investigate the relationship between entrepreneurial orientation and competitive advantage directly and indirectly through the mediating role of knowledge sharing and market orientation. Furthermore, Data was collected from managers of 62 hotels with 3-, 4-, and 5-star ratings in Addis Ababa, Ethiopia (<i>n</i> = 185). We used the partial least squares structural equation modeling to analyze the data. The study’s findings revealed that entrepreneurial orientation significantly influences competitive advantage (H1: <i>β</i> = 0.368, <i>t</i> = 4.484, <i>p</i> = 0.000). However, our research indicates that knowledge sharing does not mediate the relationship between entrepreneurial orientation and competitive advantage (H7: <i>β</i> = 0.019, <i>t</i> = 0.933, <i>p</i> = 0.176). Therefore, our results suggest that the hotel industry, which has entrepreneurial orientation, can also have competitive advantage if it implements a market orientation strategy. Furthermore, it was found that the MO partially mediated the relationship between EO and CA, with (H8: <i>β</i> = 0.229, <i>t</i> = 3.479, <i>p</i> = 0.000). Beside this, the uniqueness of this research lies on establishing a theoretical foundation for the hospitality industry by examining the significance of entrepreneurial orientation for competitive advantage. Moreover, the model contributes to an expanding body of knowledge and dynamic capability theory.</p>