This study investigates the impact of dynamic capabilities—specifically adaptive capabilities and innovative capabilities on business performance and sustainability of Malaysian microenterprises, with entrepreneurial orientation (EO) examined both as an independent construct and a moderator. Drawing upon the Dynamic Capabilities View (DCV) and the Resource-Based View (RBV), a conceptual model was developed and empirically tested using Partial Least Squares Structural Equation Modelling (PLS-SEM). Data were collected from 146 microenterprise respondents, primarily alumni of MARA’s Diploma in Technopreneurship. The results indicate that adaptive and innovative capabilities significantly enhance business performance, while EO directly contributes to sustainability and amplifies the effects of dynamic capabilities on outcomes. Business performance was also found to mediate the relationship between dynamic capabilities and sustainability. Model fit indices confirmed robustness (SRMR = 0.062; NFI = 0.701), while explanatory power was substantial (R² = 0.617 for business performance; R² = 0.635 for sustainability). The findings underscore EO as a behavioural and cognitive enabler that enhances the value of dynamic capabilities, enabling microenterprises to adapt, innovate, and thrive under turbulence. The study contributes theoretically by extending RBV and DCV into the microenterprise context and provides practical and policy implications for entrepreneurial ecosystem development in Malaysia.