Abstract:

Purpose - The aim of this paper is to examine the role of trust in developing interfirm relationships between project-based companies.

Design/methodology/approach - The study follows a systematic literature review on interfirm relationships and trust, and the case study research design. Eight project-based organizations (24 dyads) were examined using semi-structured in-depth interviews (IDI) and documentary analysis.

Findings - The study results showed unique relationship life-cycle patterns and confirmed the critical role of trust in interfirm relationship development. Project-based companies search for trustful partners, however, they often start single project cooperation with unknown partners, and they try to substitute trust with various formal mechanisms. The main advantages of the high level of trust concern lowering transaction costs, better exchange of knowledge, and the possibility of re-activation of cooperation with a project partner. The study also shows the vital role of trust at the interpersonal level.

Research limitations/implications - The study has an explorative nature with the qualitative approach and case study of limited generalizability. However, this limitation can serve as a direction for future research. The study results allow for building a new framework for the development of the relationship life-cycle between project-based companies.

Practical implications - The implication for practice is that managers in project-based companies could pay more attention to the criteria of project partners' selection and individuals representing the company in project cooperation. Also, the role of image, and reputation of the company are important in partners’ selection when they start project cooperation.

Originality/value - The findings contribute to interfirm relationship development literature focusing on temporary and discontinuous cooperative relationships, contrary to previous research mainly concerning stable and well-established relationships.