Firms require both operational and dynamic capabilities for their survival. Operational capabilities are vital for short-term survival, while dynamic capabilities enhance evolutionary fitness required for long-term survival. However, prioritizing short-term survival can compromise long-term evolutionary fitness and vice versa. In this study, we ask whether the survival-enhancing benefits of capabilities vary across a firm’s lifecycle. We theorize that while both operational and dynamic capabilities are important for survival, their relative importance depends on the lifecycle stage. Operational capabilities are more important during the initial phases of the lifecycle, whereas dynamic capabilities become increasingly important in later stages. Using panel data regression on a longitudinal sample of U.S. public firms from 1981 to 2023, the study finds support for these predictions. The findings contribute to the literature on firm capabilities and survival, providing practical insights for executives, suggesting which capabilities to prioritize at different stages of the firm lifecycle, particularly given the resource-intensive and path-dependent nature of capability development.
