– The purpose of this paper is to explore the relationship between trust and contract in the context of externalized local public services provision.
– A multi-theoretical framework is used to analyse different combinations of control mechanisms (i.e. trust and contract) with reference to three cases of externalized water service provision in Estonia consisting of inter-organizational relationships between local governments and water companies with different ownership structures (public, private and mixed public-private).
– The relationship between trust and contract, which can either be substitutes or complements, or eventually erode each other, is contingent upon the capacity of interacting individuals (and related organizations) to keep interests aligned in water services provision.
– The relationship between trust and contract is analysed by considering the interactions between key actors within the underlying governance setting.
