Purpose – In the extant literature a firm's development of its competitive advantage is seen to be the task of the firm alone. The purpose of this paper is to introduce a new and a broader approach of how competitive advantage can be developed and maintained in today's highly competitive and dynamic markets. To this end, how a firm handles its relationships with significant actors in its network becomes very decisive for the development of its competitive advantage.

Design/methodology/approach – Drawing on a network approach, case studies have been used to shed lights on the extent to which the development of competitive advantage of firms affect and are affected by their interaction with some actors in a network of exchange relationships.

Findings – An important conclusion of this study is that a firm's highly valued performance, an indication of its strong position or competitive strength, has its roots in its regular and intensive interaction with some significant actors in its network.

Research limitations/implications – All firms in this study have demonstrated that competitive advantage can be achieved by building up a strong position through interaction, learning and adaptation with some significant actors in the marketplace. Since the study is based on one setting, extending a similar study to several settings will be very useful.

Originality/value – The paper provides insights into how a firm, in the effort to build its competitive advantage, draws on its own capabilities and complementary capabilities of its partners in a network.