A two-phased qualitative study was conducted to explore the facilitators of non-local (i.e. domestic or international) partnerships formed by small- and medium-sized firms (SME). Rooted in trust, proximity and dynamic capabilities lenses, the study focused on behaviors of SMEs performing in dynamic, competitive and highly interlinked industry, the information technology (IT) industry, in a service provision context. Along with the conceptualization of IT service partnerships, propositions were derived and a research framework was presented. At the first phase, exploratory interviews were conducted with 21 IT SMEs operating in Chicago. Information on demographics, partnership definitions, types and motivations, partnership portfolios and experiences was collected from senior managers via semi-structured interviews. At the second phase, case study analysis was performed with 10 Chicago IT SMEs: software development and IT consulting firms older than 3 years and having 11-250 employees. The case pool consisted of firms without any partnerships, firms with local partnerships only, and firms with local and non-local partnerships. Data was collected from key informants, public sources, corporate documents and applications. Findings revealed that IT SMEs, indeed, formed service partnerships with other non-local IT firms. Not the firm size but the context-specific organizational capabilities (such as partner assessment, coordination and knowledge transfer, communication, relationship management and bonding) were influential on this firm behavior. These capabilities were identified as dynamic capabilities. Furthermore, organizational proximities (such as shared norms, values, networks, and local representation of the distant firm) enabled formation of these partnerships. The depth and breadth of the capabilities and proximities were moderated by the type of the IT service rendered via the partnership. Equally important were the impacts of the senior managers' profile (experience and background) on the non-local partnership formation. According to the analysis, the senior manager characteristics not only influenced directly the formation behavior but also indirectly through firm-level partnership capability formation. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]