Purpose This paper aims to propose a new theoretical model based on the AAR framework (actor bonds, activity links and resource ties) to examine the effects of the identified buyer‐supplier relationship elements on four indicators of relative competitive advantage for the buyer firm. Design/methodology/approach The paper bases its findings on data gathered through a survey of 216 key informants within the Australian manufacturing sector. AMOS v. 18 is used to perform confirmatory factor analysis and to estimate a structural model of the proposed hypotheses. Findings The paper finds support for the notion that actor bonds between the firm and its largest supplier provide a source of competitive advantage that result in higher relative customer satisfaction, innovation, market efficiency and market effectiveness for the buyer firm. The paper also supports the notion that a positive relationship between information sharing and asset efficiency exists. Practical implications This paper demonstrates that the maintenance of positive relationships with the firm's largest supplier has implications for the firm in terms of its competitive outcomes. There is now more support for managers when building and maintaining relationships with important suppliers since there are potential implications for the firm's own competitive position. Originality/value The findings of this study extend previous research in the area of relationship marketing by providing a new link between relationship elements and direct competitive outcomes in a follow‐on market. It also shows that these elements have differential effects on these competitive outcomes.
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