Problem solving is a fundamental process in the development of new products. This especially holds for small firms, which have to be creative given their limited resources. This paper addresses the questions: how do small innovative firms solve the technical problems that they face? And: how does the type of problem matter? In a first empirical test, Atuahene-Gima (2003) found support for the view that problem-solving capabilities “enable a firm to perform critical product development activities better than its competition” (Atuahene-Gima, 2003, p.363). To improve our understanding of problem solving proficiency in new product development (NPD) projects of small innovative firms, we build and test theory about whether the effects of organizational project characteristics on problem-solving proficiency are contingent on the type of problem a project team is confronted with. We make a distinction between autonomous problems and systemic problems. Autonomous problems are technical or operational problems that are related to individual components and that have no implications for other components. Systemic problems, on the other hand, are problems that have implications for multiple, interdependent components. Project teams can strongly differ in terms of the extent that they are confronted with one type of problem or the other, and this might demand different organizational approaches.