Display omitted The following points are ascertained from this study: ▶ Some interfirm distribution networks (IDNs) perform better than others. ▶ Successful network leaders have a capability for developing and managing IDNs. ▶ Extranet capability is the ability to create, manage, and evolve successful IDNs. ▶ Extranet capability increases relational resources thereby adding partner value. ▶ Extranet capability is an essential capability for network leaders and IDN success. Firms are turning toward e-business technologies to increase efficiency and effectiveness and, thereby, acquire competitive advantage. We focus on interfirm distribution networks (IDNs) connected by extranets. Our thesis is that IDNs behave like alliances. As such, the network leader in the IDN may have an organizational capability related to developing and managing IDNs. This extranet capability is posited to positively influence three relationship capital resources (trust, information exchange, and communication quality), which, in turn, influence positively five network performance outputs (responsiveness, financial performance, efficiency, effectiveness, and innovativeness). Based on data from 175 new car sales managers, empirical tests of the hypotheses provide support for the posited explanation of IDN performance.