Nowadays, innovation plays a key role in a company's survival in an innovation-driven economy. Inter-firm alliances allow Small and Medium Enterprises (SMEs) to develop critical capabilities for growth and innovation through access to external resources and knowledge which are otherwise unavailable. At present, inter-firm alliances are an innovation-generating procedure, challenging SMEs' learning and entrepreneurship skills in order to create new products and services. The main research objectives of this paper are: (i) to identify and categorize factors that SMEs take into account when deciding to enter an inter-firm alliance; (ii) verify the importance of innovation-related motives; and (iii) measure the influence of firms' characteristics on SMEs' motives. A total of 4.534 SMEs supplied by the Informa D&B Portugal database was surveyed by email. Data was collected in June and September 2011 through an online questionnaire. A total of 260 completed questionnaires were returned, yielding a response rate of 5.73%. For measurement, we used the Haase and Franco (2011) scale of importance with addition of the "knowledge acquisition and transfer" variable (Kogut, 1988). The principal business activities of SMEs in the sample are services (52.3%), manufacturing (43.8%) and agriculture (3.8%), and 62.6% of respondents were involved in alliances with other firms. The motives for entering inter-firm alliances were defined through exploratory factor analysis using the method of principal components and the varimax rotation method with Kaiser normalisation. The analysis grouped the variables into three different factors, explaining 67.2% of the total variance. Factor 1: "Innovation, learning and knowledge acquisition and transfer"; Factor 2: "Operational improvements and reaching competitive advantage"; Factor 3: "Entering new markets and improving and maintaining market share". The KMO found was 0.878 and the smallest Cronbach's alpha 0.842, which guarantees high reliability of the psychometric instruments. Using the one-way ANOVA several significant differences were found between manufacturing and service industries as well as between firms focusing on the domestic and export markets. Also innovation, efficiency and competitiveness appear to be the main factors driving SMEs' cooperation.
