JOURNAL OF BUSINESS LOGISTICS. Vol 2, No. 2. 200 THE EFFECTS OF LOGISTICS CAPABILITIES AND STRATEGY ON FIRM PERFORMANCE Daniel F. Lynch Montana State Untverstty-billungs Scott B. keller d John Ozment have attempted to test Porters theory of generIc strategy and link it to performance, but the results vary. Simlarly, it is easy to believe that a firm cannot be successful without certain resources and/or apabilities Efforts have been made to test the resource-based theory and to ue capabilities to firm performance, again with varying results These two theories and related research streams have emerged independently, and neither has controlled for the effects f the other when attempting to link these factors to firm performance That IS, those who support a connection between strategy and performance have not incorporated firm resources(capabilities Into ther have attempted to link capabilites and firm pertormance have not incorpo egy Rather than view each theory separately and determine which group is right or wi ntegrate the two approaches This research is based on the proposition that corporate strateg with resources/capabilities that"fit"That is, firms pursuing a given strategy with the proper capa- bilities should outperform firms pursuing the same strategy w ithout adequate capabihties. This proposition may seem obvious, but no researchers have examined both capabilities and strategy in the same study. In the absence of better evidence, It is reasonable to assume that some managers will focus on capabilites without regard to strategy and vice versa, nd without necessanly connecting the two. To test this proposition. survey data from the retail groCery industry are analyzed via LISREL