Joseph Szarka is a lecturer in French and management at the University of Bath, England. His paper reviews the management literature on networking and puts forward a theory on small firm development in terms of network formation. This model holds that it is insufficient to consider the small firm in isolation: the small firm is particulary dependent on the nature and quality of its relations with other firms and with the external world. These relations can be conceived in terms of exchange networks, commmunication networks and social networks. Goods and services, information, ideas and values are mediated by those networks and social network. Goods and services information ideas and values are mediated by those networks. Depending on the linkages between firms, network constitutions can be based on relations of control, co-ordination or co-operation. Network constitution is shown to influence the viability and development paths of member firms. Factors encourging network formation and development are analysed. The key issue of economic effectivness and efficiency are related to questions of concentration and market condition. The paper concludes by emphasising the role of network formation for the expansion of the small firm sector.