The study aims to investigate the role of knowledge-based dynamic capabilities in achieving competitive advantage. First, the study considers the firms’ important marketing and supply chain management capabilities and logically identifies market orientation, supply chain integration, and marketing-technical integration as knowledge-based dynamic capabilities, then empirically attempts to examine their role in achieving competitive advantage. A quantitative research design was utilized, and all constructs were directly measured using multi-item scales. Data was collected from 625 pharmaceutical firms working in Pakistan and analyzed by using partial least squares structural equation modeling. The results show that market orientation has the strongest effect, followed by supply chain integration, and marketing-technical integration. The study provides strong evidence for the need for a knowledge-based approach in firms. Firms must develop knowledge-based dynamic capabilities for acquiring, generating, and combining knowledge to achieve a competitive position in their respective industries. Managers should focus on customer needs and competitor activities, integrate with supply chain partners, and promote a culture of cross-functional collaboration. The study contributes to the existing body of knowledge on knowledge-based dynamic capabilities and emphasizes the importance of a knowledge-based approach in achieving competitive advantage.