Small- and Medium-sized IT Firms and Non-local Service Partnerships : An Assessment of Facilitators

In the knowledge economy, demand for information technology services expanded in terms of scope and sophistication. Accordingly, IT firms tend to focus on core specialization and form partnerships with other IT firms for complementary services. For small/medium-sized IT firms, these partnerships are crucial to overcome their resource constraints and stay in competition. SME partnerships are trust-based; since trust can easily developed in close proximity, SMEs prefer local partners. However, some SMEs engage in distant collaboration. This study explores factors influencing IT SME's to partner with non-local firms and how these factors replace geographic proximity and enable distant collaboration. Data are collected via semi-structured interviews with Chicago IT SMEs and analyzed qualitatively. The findings indicate that firm size does not matter for distant cooperation. A firm's partnerships capabilities, affiliation with partner, partner's proximity to customer and task type in combination represent the decision environment and affect SMEs' non-local partnership formation