Current interdisciplinary research suggests that organizational capabilities have a direct, unconditional impact on firm performance. A study extends this literature by developing a framework that proposes a contingency approach to the value of organizational capabilities. This framework highlights the effect of information in the external environment in stimulating firms to deploy their technology and marketing capabilities to influence the level and speed of relevant product development activities. Using a longitudinal quasi-experiment to isolate the effects of external information on the relationship between firm capabilities and product development outcomes, results are obtained that are consistent with this framework. The study concludes therefore that the most valuable characteristic of firm capabilities may be their ability to serve as flexible strategic options.

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