It is often observed that firm survival and success have become problematic in the turbulent environments that firms face today. Resource-based theories propose that sustained competitive advantage is more a function of firm resources than of industry structure. In this paper, the nature of resources that help firms sustain (or try to sustain) a competitive advantage in turbulent environments is queried. Viewing the firm as a stock of knowledge, the argument that dynamic competence or the variety-generating capability of knowledge is an important antecedent of superior performance in such turbulent environments is developed. Copyright © 2001 John Wiley & Sons, Ltd.