This article introduces the concept of the capability lifecycle (CLC), which articulates general patterns and paths ill the evolution of organizational capabilities over lane. The capability lifecycle provides a structure for a more, comprehensive approach to dynamic resource-based theory. The analysis incorporates the founding, development, and maturity of capabilities ill a manner that helps to explain the sources of heterogeneity in organizational capabilities. In addition, the analysis includes the 'branching' of an original capability into several possible altered forms. Copyright (C) 2003 John Wiley Sons, Ltd.