What is the relationship between external networks and technology innovation? What's more, the role of absorptive capability? This study identify two type of networks-partnership networks and sponsorship networks-defined by the character and effect of the network members. Using empirical data drawn from a field survey of local SMEs operating in Guangdong province, China, through a structural equation model analysis, we found that absorptive capability partially mediated the performance impact of external networks. The relevant implications are discussed and limitations of the study are highlighted accordingly.