Inter-organisational capabilities and the transformation of trust in blockchain-based smart contracts: A framework for SME ecosystems

Blockchain-based smart contracts embed agreement enforcement within executable code, constraining the partner discretion that inter-organisational relationships (IORs) have traditionally coordinated through trust, communication, and relational governance. This raises a question that popular accounts tend to foreclose: whether automated enforcement makes inter-organisational trust unnecessary, or whether trust instead changes in function and object. Drawing on expert consultation with 28 blockchain specialists and 25 in-depth interviews with executives, we conduct an inductive study of how IORs transform as organisations adopt smart contracts. We develop a framework in which intensive relational exchange enables organisations to build two inter-organisational capabilities, Distributed Transparency Capability and Algorithmic Coordination Capability, through which they actualise the affordances that smart contracts offer. Through this capability development a distinctive inter-organisational trust form emerges, System-based Trust, defined as warranted reliance on coordinating infrastructure that partner organisations jointly construct. System-based Trust complements rather than replaces relational trust: it carries operational coordination and frees relational trust for strategic collaboration and exception handling, producing Hybrid Inter-organisational Relationships as the outcome of successful transformation. The framework applies to small and medium-sized enterprise ecosystems with limited numbers of trading partners; larger-scale consortia and power-asymmetric networks fall outside its scope. Our findings reposition smart contracts as occasions for capability development rather than substitutes for inter-organisational trust.