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The purpose of this study is to explore trust initiation and development in collaborations between universities and small- and medium-sized enterprises (SMEs) and the implications for enabling engaged scholarship (ES).

Adopting a qualitative inductive approach, semi-structured interviews were conducted with a purposive maximum variation sample comprising 14 SMEs and 12 university stakeholders.

The authors highlight the role of calculus-based trust in the initiation of collaborations emphasising the key roles of networking and referrals. As collaborations develop, reciprocal insights regarding stakeholders’ competencies and integrity and the development of knowledge-based trust can support engagement, in particular, knowledge application. Although relationships have a common sense of purpose, a fully engaged campus remains absent.

This study is based on a collaborative research between eight SMEs and one university business school and does not reflect ES fully as conceptualised. It provides few insights into the role of trust (or distrust) in such collaborations where things go wrong.

Universities looking to enable ES collaborations with SMEs need to develop and enact strategies which support ongoing engagement and enable identification-based trust (IBT). Recommendations for universities and human resource development regarding interventions to support trust initiation and development to enable knowledge application ES are outlined and suggestions are offered for future research.

University strategies to support the development of trust and, in particular, IBT are likely to benefit longer-term relationships and the development of ES between SMEs and universities.

Little research has been undertaken on trust initiation and development between academic and SME stakeholders or the associated implications for ES.

To investigate the initiation and development of effective business relationships, including knowledge transfer partnerships, with the primacy of trust as a key factor for collaborative development. Specifically, the aim was to explore Vangen and Huxham's (2003) notion of a “trust building loop” in the context of a Northern (UK) Business School and regional SMEs.

The methodological approach employed was the “General Analytic Induction” for the interpretation of the data. This was used to develop theory inductively from 23 in‐depth interviews.

The results emphasized that trust, especially trust in individuals, is fundamental to collaborative settings, from both practitioners’ and academic points of view. The study identified barriers and drivers to initiating trust‐based relationships and a model of initiating collaboration was suggested.

The benefits from the research were seen as facilitating the development of effective business relationships between local business schools and SMEs in their regions. This investigation provided pointers that might assist business schools to understand how to manage their relationships with this group of stakeholders (SMEs) to stimulate and improve engagement.

There has been minimal research works on building successful collaborations within the business schools context, which contributes to professional practice through collaboration between business schools and SMEs.