Recent developments in many aspects of theory and business practices worldwide have accentuated the need to step back and have a fresh perspective of some of the compelling emergent imperatives. On the theoretical front, conventional models of organisation of economic activity are being complemented by including sociological variables (Sztompka, 1999) while, on the practice side, many firms, finding it difficult to cope with the complexities of handling multifaceted competition, are resorting to arms length arrangements with other firms. Rapid development in Information technology is driving down governance costs having implications on firm size, industry structure and competition (Bryanjolfsson et al., 1994; Nooteboom, 2002); value chain fragmentation is leading to disaggregation and isolation of efficiencies (Evans & Wurster, 1997) making it unviable for firms to be present in all parts of chain; increased rate of globalisation and higher complexity levels of input and output markets (Zuscovitch, 1994) is making it difficult to sustain differential position in those markets.

These related developments point to a perceptible movement towards specialisation - of assets and capabilities, standardization - of offerings within the specialised domains, and fewer constraints to manage relatively complex governance structures. The first two are triggered by the proximate product market conditions while the last one is a macro phenomenon catalyzing changes across market spaces. New organisational forms i.e. modes of organizing and managing transactions, are emerging the literature about which asserts that "hierarchies are becoming increasingly infused with the elements of the market" (Foss, 2002 B). These diverse yet related themes paint a backdrop in which firms have to depend more and more on their relationships with others in order to create and deliver value, and these relationships are becoming more manageable with advances in information and process technologies.

The present research engages itself with the role of trust in the governance of inter-firm dyadic relationship. The central thesis is that Trust moderates the impact of relation specific assets and uncertainty on costs of coordination. In doing so, it opens new avenues for interorganisational relationships by enabling more options in terms of governance structures and mechanisms. It is also part of the agenda to test "higher Trust is associated with closer relationships" hypothesis. An instrument to measure the involved constructs has been adopted from literature and has been developed after subjecting it to a pretest. Final sample would include software offshore development centers and respondents would be the delivery managers.