This paper finds that IT capabilities positively influence a firm’s CE and, in turn, lead to improved product innovation performance. It thus sheds light on the value of IT capabilities for CE activities and product innovation performance. The PLS structural equation modeling approach used in this study further suggests that competitive intensity positively moderates the relationship be- tween IT capabilities and CE. Overall, this paper contributes to the development of more robust entrepreneurship and IT-focused theories and to our understanding of the business value of IT.