This paper focuses on market knowledge and dynamic capabilities in creating competitive advantage in a local unit of an International New Venture (INV). This paper draws on the knowledge-based view of the firm and builds a conceptual model that illustrates the impact of broad and deep market knowledge on the local unit’s competitive advantage and performance. It is proposed that the INV unit needs dynamic capabilities in order to efficiently convert market knowledge into competitive advantage and then performance. Managerial implications, next steps of the research, and avenues for the future research are discussed.