Purpose: The purpose of this study was to assess the effect of organizational capabilities on sustainable competitive advantage in audit firms using a case study of Deloitte LimitedMethodology: A descriptive research design was used. The study population was drawn from the offices at Deloitte Place on Waiyaki Way. The study conducted a census of all the 106 staff from the target population. Primary data was used and was collected using questionnaires. Quantitative data analysis conducted using SPSS. Quantitative data was analyzed using descriptive statistical methods. Correlation analysis was also conducted. The qualitative analysis was used to make conclusions on the open ended questions.Results: The study findings revealed that generally, the human resource capabilities, infrastructure and technology capabilities as well as the reputation capability of the firm could be described as average. Only the leadership capabilities were found to be above average based on the responses given. The study established that the firm had attained sustained competitive advantage mostly in the areas of brand identity and protection, organizational culture and the quality of services delivered. The study further established that HR capabilities, leadership capabilities, infrastructure and technology capabilities as well as reputation capability positively and significantly affected the level of sustainable competitive advantage at Delloite Kenya.Unique contribution to theory, practice and policy: The study recommended that the firm needed to modify and develop its existing organizational capabilities of the firm beyond the average level. The study also recommended the firm needed to increase the level of utilization of information systems in streamlining/interlinking its processes so that there was quicker and increased information sharing within the firm for efficiency and flexibility in responding to customer needs. It was further recommended that the firm’s organization constructs that is, an innovation-oriented organizational structure and an innovation friendly organizational culture be advanced to support and enhance the firm’s capabilities.

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