Literature indicates it is crucial to understand how SMEs could adapt to changes in their external environment to develop a competitive advantage. However, there is limited discussion on how entrepreneurs’ resilience functions as one of the dynamic capabilities required to maintain their company’s competitive advantage in the long-term. This study aimed to investigate how entrepreneurial resilience affects SMEs ability to achieve sustainable competitive advantage. It also analyzed the moderating role of local cultural values in reinforcing resilience and sustainable competitive advantage. The population consisted of 400 handicraft SME who were thought of as Bali’s sustaining tourism sector. The results demonstrated that financial capital, human capital, and social capital were factors that shaped entrepreneurial resilience, where the ownership of capital and access to capital helped entrepreneurs when encountering changes in the dynamic and challenging industrial environment, where the role of financial capital was one of the sources of resilience that had the most significant influence. Furthermore, entrepreneurial resilience also contributed significantly to the achievement of sustainable competitive advantage. Moreover, the results also indicate that local cultural values strengthen entrepreneurial resilience because entrepreneurs who adjusted to local cultural norms developed in the surrounding community tended to respond positively to their behavior. Positive environmental acceptance could reinforce entrepreneurial resilience, given the psychological support of their behavior.