In today's highly competitive business environment, having and maintaining a competitive advantage is critical to the success and survival of small sized businesses. What types of small-sized enterprises have more capabilities to build competitive advantages? The main purpose of this research is to analyse how the internal capabilities of firms, e.g., internal marketing, corporate entrepreneurship and organisational commitments, have an impact on the achievement of competitive advantages. Our survey-based data from 115 small sized companies in Iran showed that both corporate entrepreneurship and organisational commitment in small sized companies was positively changed by internal marketing. Furthermore, we found a positive relationship between the firms' internal marketing and corporate entrepreneurship activities with the achievement of competitive advantages. Consequently, small sized enterprises should reinforce their internal marketing and corporate entrepreneurship activities to obtain competitive advantages. Therefore, motivated and highly satisfied employees are essential for not only enhancing the firm's entrepreneurship activities and organisational members' commitment, but also for establishing a competitive advantage.