Dynamic capabilities play a crucial role in gaining a competitive edge, while innovation is key to successful business strategies. A study in East Java, Indonesia, looked at how adaptive creative capabilities affect the relationship between dynamic capabilities and innovation performance. The research found that dynamic capabilities positively impact competitive advantage, innovation performance, and adaptive creative capabilities. Additionally, adaptive creative capabilities boost innovation performance, which in turn leads to competitive advantage. The study highlights the importance of fostering dynamic capabilities, adaptive creative capabilities, and innovation performance for village unit cooperatives to excel in a competitive market.