A supplier's attractiveness in public procurement mainly depends on its competitiveness in price, quality, and delivery. The current study aimed to investigate the suppliers’ capabilities that can develop this competitiveness. The study identified market orientation, marketing-technical integration, and supply chain integration as knowledge-based dynamic capabilities and empirically attempts to define their role in the development of firms’ competitiveness through innovation capability. Taking a quantitative approach, we developed a theoretical framework and analyzed the data collected through a survey questionnaire from the 216 managers of pharmaceutical firms by partial least squares structural equation modeling. The results showed positive effects of market orientation, marketing-technical integration, and supply chain integration on innovation capability and established a major role for innovation capability in competitiveness development. The study is unique in the sense that it deals with a real-time problem of manufacturing industries selling their products to the public sector. Firms' knowledge-based dynamic capabilities are not properly identified in the literature, and their appropriate role is not established. The study offers a new perspective on knowledge-based research by highlighting the role of these capabilities. It guides managers to develop a positive approach to the use of firms’ capabilities.

Keywords: Innovation Capability, Market Orientation, Marketing-technical Integration, Supply Chain Integration, Public procurement, Competitiveness.