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This paper analyzes the impact of trust and trust agents on small to medium-sized enterprises' (SMEs) ability to derive benefits from it. The findings suggest that trust is a significant factor moderating the way SME owners/managers perceive the potential benefits of networks. These findings support earlier research that posited that networking provides an avenue for SME owners/managers to learn about potential business opportunities. However, Australian owner/managers that belong to networks do not demonstrate behavior and practices typical of either explorative or exploitative networks. Instead, the findings suggest that in addition to the typical networks, a third type of network should be added to the literature-embryo-explorative networks. Such networks describe SMEs owners/managers who attend network meetings and report on what they learn about new opportunities from the networks; however, they do not tend to engage in typical collaborative activities (such as joint marketing venture) as described in the networking literature. Embryo-explorative networks are defined as those that have yet to develop into the explorative networks-probably because there has been insufficient time to build trusting relationships required to foster collaborative ventures that involve some risks.
Introduction
Innovative activity is crucial to the growth of firms-especially small to medium-sized enterprises (SMEs) (Shane and Venkataraman 2000). The importance of innovation to national competitiveness is well established (Porter 1999, 1998). Amabile et al. (1996) argue that all innovations begin with ideas. If a firm can convert an original idea into an original design/process that in turn gives said firm an advantage in the marketplace, then the firm is being innovative and is likely to grow and succeed (Amabile et al. 1996). Hence, when firms form successful strategic alliances that encourage the development and sharing of innovative designs or processes, they in turn, are able to develop a competitive advantage over other firms in other regions (Porter 2000, 1999, 1998; Doz and Hamel 1998).
In response to Australia's low levels of investment in innovation (compared with other Organisation for Economic Cooperation and Development [OECD] countries) (Australian Research Council [ARC] 2001) and the government's aim of increasing national competitiveness, new policies have been developed that encourage network formation. In particular, the "Innovation Access Program" under the umbrella policy entitled Backing Australia's Ability (Department of Industry, Tourism and Resources [DITR] 2003) aims...