The objective of this study is to empirically test not only the direct effects of collaborative network and integrated information systems (IS) on firm performance, but also the moderating role of IS integration along the value chain in the relationship between of collaborative network and firm performance. The six hypotheses are tested with data on 1561 firms representing the perspective of Australian SMEs. The hierarchical multiple regression analysis is employed to examine the direct effects and the moderating relationships proposed. Results show that integrated IS, is a critical driver of both innovation and financial performance, while merely having collaborative network does not lead to improved financial performance. Furthermore, a moderating effect of IS integration in the relationship between collaborative network and innovation performance is found. For practical application, these findings offer informed advice to managers on how to innovate and survive in the challenging economic climate.