NATURE OF TRUST IN SMALL FIRM CLUSTERS

Small firm clusters are noted for their success across the globe. Inter‐firm cooperation and trust is said to be central to their success. But past research has restricted itself to ‘culture’ based explanations for cooperation and trust, that is, characteristic based trust. Doubts have been cast by a few studies about characteristic alone being a rationale for trust. In this paper, using the existing classification of trust and based on qualitative data from secondary literature on small firm clusters; we have argued for existence of more generalized bases of trust, namely knowledge and institutions, which develop through interaction among parties and can possibly lead to trust and cooperation in small firm clusters.