Cooperation among public sector organizations (PSOs) is increasingly important in the management
of resources in welfare systems. A Joint Venture (JV) is an organization form that
enables PSOs to cooperate with each other in order to achieve economies of scale. However,
JVs contain interrelated horizontal and vertical control relationships (between the owners
and between the owners and the JV Company) that complicate their control. The first aim
of this paper is to map the dynamics in vertical and horizontal control packages in municipal
JVs and to describe the relational factors that affect them. Based on three case studies
we conclude that vertical control packages are affected by: goodwill trust and competence
trust; parent differences in management style and size in combination with control competence;
parent diversification (low relatedness between the JV’s activity and the parents’
other activities); and the horizontal control package (e.g., rules for parent interaction and
distribution of work). Horizontal control packages are affected by: goodwill trust, system
trust and calculative trust; parent differences in size; and efforts to achieve equality. The
second aim of the paper is to contribute to the discussion on the relationship between trust
and control. We observed that trust is potentially unaffected by the introduction of formal
controls. We also found that trust has an inverted “crowding out” effect on control. A high
ambition to maintain trust leads to underdeveloped formal controls. In addition, we found
that the ambition to preserve trust may inhibit the realisation of economies of scale.