In order to face the challenges derived from an increasingly competitive and disruptive environment, firms often engage in collaborative arrangements with other firms. While it is argued that inter-firm networks can serve as a way to catalyze innovation, to manage risks involved in R&D and to enable the creation of new value through co-creation, the causes and reasons for inter-firm collaboration are well-known. However, little effort has been focused at critically examining the challenges that co-creation brings on a network and firm-level. This research addresses this issue by taking a process perspective on the formation and development of an inter-firm network in relation to its technologically turbulent environment. Building on a case study involving firms from that network, this research shows that such arrangements may also involve challenges for participating firms. These challenges relates to a paradoxical tension between exploitation of relation-specific assets and success in the long- and short-term, but also a challenge in terms of positioning the firm within the network.