This paper investigates factors conducive to the development of Small and Medium Enterprise (SME) innovation in the context of the adoption and use of electronic collaboration technologies (eCollaboration), to enhance business growth, competitiveness and future economic viability. A change from competition to collaboration is an imperative for many firms today. The current economic climate is one reason why firms should work together, but more driving than this are the ubiquitous effects of globalisation. Australian firms are facing fierce competition from many overseas nations which have the advantage of cost effective labour. Businesses must transcend from attitudes of competing to attitudes which support collaboration but how? This paper answers this question by presenting research which illustrates how SMEs can achieve successful collaboration utilising electronic tools to support and facilitate their cooperation. Qualitative data are acquired through a number of focus groups from both successful and unsuccessful collaborators in a variety of industries in the Southern Sydney Region. Analysis of these data reveal two major factors. These factors are unpacked and explored, and coupled together to provide a model of eCollaboration. They are introduced below: 1) What is needed to make collaboration and eCollaboration work? Five elements are discovered which either inhibit or enable collaboration (trust, reputation, culture, power, ownership). Of these, trust is found to be of greatest importance to the successful development of collaborative relationships. 2) What are the considerations (enablers and inhibitors) of successful collaboration and eCollaboration? There are many elements which comprise this factor. However, essential elements such as a focus on core business and limited intervention are among the more critical.