Abstract This study aims to critically review the role of digital innovation in improving MSMEs performance through the development of adaptive business models in the age of disruption. Using a literature review approach, this article analyzes selected studies related to digital innovation, adaptive capabilities, business model innovation, resilience, agility, and MSMEs performance. The findings indicate that digital innovation does not automatically improve MSMEs performance; rather, its impact depends on the ability of MSMEs to develop adaptive capabilities, absorb external knowledge, foster open innovation, and reconfigure business models in response to market turbulence. The review also highlights that resilience and agility serve as critical mechanisms linking digital innovation and sustainable performance. This study contributes to the literature by integrating digital innovation, adaptive business models, and MSMEs performance into a conceptual framework relevant to developing economy contexts. The article also offers practical recommendations for MSMEs, policymakers, and future researchers in strengthening digital transformation and business resilience. Keywords: Digital Innovation; MSMEs Performance; Adaptive Business Model; Resilience; Business Model Innovation