This paper investigates how organisational capabilities shape business strategy and influence the performance of Russian enterprises. Although the emphases on both cost leadership and differentiation were positively associated with firm performance, the differentiation-performance link became insignificant when marketing and technology capabilities were included in a composite model. Marketing and technology capabilities - not the strategy per se - appear to be the primary and dynamic drivers of firm performance. The implications of this perspective on the capabilities-strategies- performance nexus are discussed within the Russian context.
