The aim of the study was to explore the impact of collaboration across small schools on the development of leadership capacity. Despite a growing body of research on school leadership, little is known about its function and development in small schools (defined here as NOR less than 120). Small schools, of which there are about 2700 in England, collectively cater for significant numbers of children and whilst Ofsted reports have shown that they managed the early school reform agenda well, concerns continue to be raised about their capacity to manage the new reform agenda, e.g. Extended Schools, Every Child Matters, particularly in a period of falling rolls. Leadership capacity would be a significant factor in this challenge. A sample of 72 headteachers of small, mainly rural, schools was recruited in two local authorities. This constituted almost all the schools with NOR less than 120. The headteachers were interviewed in the spring and autumn of 2006. The headteachers were fully conversant with the aims of the study and readily agreed to participate. The interviews covered questions of perceived leadership challenges, collaboration (form, extent, purpose, benefits and challenges) and the perceived impact of collaboration on their leadership capacities across the period of the study. The interviews were tape recorded and subjected to analysis through identifying themes emerging from the data rather than imposing a priori categories. The main finding from the present study is that school collaboration extends and intensifies heads' "operational space". Collaboration was discussed by the headteachers almost exclusively in terms of the time, money and workload involved. The expanded opportunities for teaching and learning were recognised and celebrated but the headteachers' main focus and preoccupation was the sheer hard and extra work entailed in collaborating. There was no mention in the interviews of any other facet of leadership behaviour although "networking" was obviously implicit throughout. If small schools are to build on their success with the first reform agenda it seems that a better understanding of their circumstances and operation and more carefully targeted support in promoting appropriate leadership capacity are called for, based on models of leadership more adapted to their circumstances. At the same time it is argued that heads of small schools are not without their successes. They have been pathfinders in aspects of collaboration. Lessons might be learned from small schools that have implications for the larger system.