Due to covid-19 pandemic, half of the available MSMEs in Bali are closed because business owners are unable to adapt to environmental changes. In addition, problems such as the lack of dynamic capabilities, lack of innovation in existing resources are the reason of why the MSMEs failed to attain their main objectives. The purpose of this research is to analyze the impact of dynamic capability and innovation ambidexterity on the performance of Micro, Small and Medium Enterprises (MSMEs) in Bali Province. 400 business owners of MSMEs in Bali Province were used as the sample of this research. The results showed that dynamic capability variables have a positive and significant effect on Innovation Ambidexterity and Innovation Ambidexterity has a positive and significant effect on the company's performance. Dynamic Ability has a positive and significant effect on the company's performance through Innovation Ambidexterity, while Dynamic capability has a positive but not significant effect on the company's performance. This research can be used as the reference for future research on the importance of innovation ambidexterity in MSMEs in other provinces.

Keywords: MSMEs, Dynamic Capabilities, Innovation Ambidexterity, MSMEs’ Performance