Emerging technological advances like the Internet and information technology have led to increasing global innovation and a proliferation of entrepreneurial ventures that have become key drivers of economic and social development (Razmdoost et al., Journal of Business Research 113:290–302, 2020). Dynamic capabilities enhance the ability of innovation-focused startups to sense and size opportunities and help them continuously reconfigure their internal and external resources to successfully launch new products (Teece, Strategic Management Journal, 28, 1319–1350.). Dynamic capabilities theory is the theory that supports analysis of innovation-driven entrepreneurship’s core elements. However, in the context of digitalization, ecologicalization, and internationalization, dynamic capability theory faces many challenges in its ability to explain the phenomenon of innovation-driven entrepreneurship. Moreover, it is a challenge to decipher the mystery of firms’ competitive advantages in a dynamic and complex environment. Therefore, reviewing the progress of dynamic capability theory, especially in the field of entrepreneurship research, further enriches the theory and promotes exploring innovation-driven entrepreneurship theory from a dynamic capability perspective.