The Moderating Role of Trust in SME Owner/Managers’ Decision-Making about Collaboration by Yvonne Brunetto and Rod Farr-Wharton This paper analyzes the impact of trust and trust agents on small to medium-sized enterprisesɅ (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 network- ing 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 net- works. 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 collabo- rative 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 impor- tance of innovation to national competi- tiveness 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 origi- nal design/process that in turn gives said Yvonne Brunetto is senior lecturer in the Griffith Business School, Department of Manage- ment, Gold Coast Campus, Queensland, Australia. Rod Farr-Wharton is senior lecturer of innovation and entrepreneurship in the faculty of business, University of the Sunshine Coast, Maroochydore, Queensland, Australia. Address correspondence to: Yvonne Brunetto, School of Management, Griffith University, Meadowbank, University Drive, Brisbane, Qld 4111, Australia. Tel: (07) 33821341. E-mail: y.brunetto@griffith.edu.au. Journal of Small Business Management 2007 45(3), pp. 362–387 JOURNAL OF SMALL BUSINESS MANAGEMENT 362