Prior work on collective action and institutions has provided ambiguous results regarding the impact of heterogenous interests. While some scholars underlined the challenge of reaching an agreement on the right policies and the likelihood of defecting in heterogenous groups, some have argued that heterogeneity may lead to complementarity and allow the formation mutually beneficial agreements. In this paper, we argue that heterogeneity in interests lead to different collective action efforts depending on stakeholders’ history of collective action and trust. Prior ties and shared history increase the level of trust among stakeholders with shared beliefs, and absent a history of cooperation, stakeholders must rely on mutual agreements on a basis of resource complementarity. We test this proposition by examining the formation of multi-stakeholder groundwater sustainability agencies in California between 2014 and 2024. We examine the formation of ties between local agencies with similar and dissimilar water use, on the basis of resource complementarity or shared history. We use the construction of the 1870 Transcontinental Railroad as an institutional legacy and study its long-term impact on local levels of trust and social capital among stakeholders. Our paper speaks to the enduring puzzle of how heterogeneity in interests shape collective action to manage the commons. We discuss the implications for the study of stakeholder governance, collective action, and institutional emergence.
