The government has acknowledged the importance of cooperatives in economic development and civil society. It has been undertaking efforts to facilitate the development of cooperatives by involving allocative, regulatory, and redistributive measures in accordance with the cooperative principles. However, the impact of government involvement and cooperative principles on cooperatives’ performance has been a less-explored topic. This study sets out to examine the relationship between entrepreneurial orientation and cooperatives’ performance as well as the mediating role of government involvement to guide cooperative policy in Sabah, Malaysia. This study holds implications for stakeholders, highlighting the importance of policymakers’ promotion of cooperatives and the cooperatives’ pursuit of collaborations for growth and sustainability. The results indicate that government involvement significantly mediates the relationship between entrepreneurial orientation and cooperatives’ performance. The findings suggest that cooperatives should pursue partnerships not only for growth and sustainability, but also to improve their overall performance within the context of sustainable development. In pursuit of sustainable development, cooperatives in Sabah, Malaysia should proactively engage the government to mediate their performance and amplify their impact.