Drawing from resource-based theory, we study how and under what conditions small- and medium-sized firms (SMEs) capitalise on their proactive entrepreneurial behaviour (PEB) to achieve new product development (NPD) performance. Our data were drawn from a cross-sectional questionnaire survey of 401 UK-based SMEs in the manufacturing sector. We identify an upward curvilinear relationship between PEB and NPD performance. Taking a step further, we propose and confirm that this curvilinear association arises from, in part, SMEs’ innovation capability, which in turn translates into NPD performance. We also find that this upward curvilinear relationship between PEB and innovation capability flips to a downward curvilinear relationship when firms pursue a customer and competitor orientation. This paper looks beyond the linear relationship that exists among entrepreneurial behaviour, market orientation and innovation outcomes.