Every organization strives to achieve the best market position, attain a competitive edge, maintain high performance and end up being a market leader. However many firms start on the right foot but as the time progress some fall or fail to achieve the same. This study looked at the role of initial condition in attaining competitive advantage as well as the overall performance. The research was a census of the commercial banks sector and the findings revealed that the initial conditions do not influence the performance though contributes gaining competitive advantage. The study looked at the moderating role of dynamic capabilities on the relationship between initial conditions and performance. The findings show initial conditions effect on performance diminishes with time. However dynamic capabilities are found to play moderating role in the relationship between initial conditions and performance of commercial banks in Kenya. The study recommends that all banks staff be educated on the various categories of dynamic capabilities to enable the utilize them to improve their performance and well as gaining competitive advantage.
Keywords: Performance, Initial Conditions, Dynamic Capabilities