This study investigated the impact of knowledge absorptive capacity on innovation performance among venture firms in Korea. To this end, we analyzed the moderating effect of entrepreneurial orientation on the relationship between knowledge absorptive capacity and innovation performance, as well as the three-way interaction effects considering environmental dynamism. The main findings are summarized as follows. First, knowledge absorptive capacity increases innovation performance up to a certain level, but excessive increases in knowledge absorptive capacity negatively affect innovation performance. That is, knowledge absorptive capacity and innovation performance exhibit an inverted U-shaped curvilinear relationship. Second, entrepreneurial orientation showed a positive (+) moderating effect on the relationship between knowledge absorptive capacity and innovation performance. Specifically, the degree of entrepreneurial orientation was found to influence the strength of the inverted U-shaped curvilinear relationship between knowledge absorptive capacity and innovation performance. Third, the more dynamic the environment, the more positively these interaction effects influence innovation performance. Through these findings, it can be confirmed that entrepreneurial orientation is necessary to enhance the effect of knowledge absorptive capacity on innovation performance. The implications of the research findings can be summarized as follows. First, it is important to possess an optimal level of knowledge absorptive capacity to enhance a firm's innovation performance. Second, the higher the environmental dynamism, the more important entrepreneurial orientation becomes in preventing diminishing returns through leverage with absorbed knowledge and in strengthening innovation performance.