Most existing studies on small and medium-sized enterprise (SME) strategy have advocated passive strategies that avoid direct competition with large firms and settle in niche markets. In contrast, this study argues that under certain environmental conditions, SMEs can survive and prosper even in direct competition with large firms by leveraging their distinctive strengths. To this end, this study raises the following three research questions. First, what are the environmental conditions under which SMEs can succeed in direct competition with large firms? Second, do SMEs possess strengths that they can utilize relatively better than large firms? If so, what are they? Third, what are effective competitive strategies against large firms? To answer these research questions, a multiple case study was conducted based on both static and dynamic models. First, using the static model, the study investigated under what environmental conditions, utilizing what strengths, and employing what strategies SMEs can succeed in direct competition with large firms. Additionally, using the dynamic model, the study examined the dynamic development process of strategies and resources, and the implications of the gap between the top management's business objectives and available resources for SME competitive strategy. As a result, several implications for SME competitive strategies against large firms were derived.