Current conceptualisations of information systems strategy (ISS) in knowledge-based small and medium enterprises (KSMEs) suggest the utilisation of a core competencies approach. This research explores the current nature of ISS in twelve Australian SMEs in one of the most knowledge intensive industries, the biotechnology industry. An emergent model is presented and evaluated against existing literature on ISS in the small business context. The findings of this research challenge current conceptualisations of ISS in KSMEs highlighting the important role of the knowledge creation context, the permeable nature of the firm boundary, dynamisms between contexts and the explicit role of IT.