This study explores the micro-foundations of dynamic capabilities required by social enterprises engaged in microfinance. It investigates how a microfinance institution develops dynamic capabilities to achieve social innovation by meeting the needs of its clients, who primarily belong to lower-income groups. We employed a case study method with an exploratory approach to collect qualitative data, which was subsequently examined using content analysis. The analysis revealed fourteen micro-foundations of dynamic capabilities, with six micro-foundations for sensing and four micro-foundations for each seizing and configuring. These identified microfoundations are specific to the context of microfinance institutions. By leveraging the findings of this research, future studies can analyze the generalizability of the micro-foundations of dynamic capabilities discovered in this study, thereby facilitating the ongoing process of theory development.