ABSTRACT This study explores the critical role of trade associations in sustaining coordination and cooperation dynamics within tourism destinations. Acknowledging both the bright and dark sides of interorganizational relationships (IORs) in tourism, where extensive connections can produce beneficial outcomes as well as adverse effects like inertia, this research provides a nuanced examination of these dynamics. Utilising a constructivist grounded theory approach informed by social capital theory, this study examines the role of trade associations in Venice's hospitality sector through 22 in-depth interviews. As a result of applying Gioia’s methodology for qualitative analysis, trade associations emerge as pivotal actors providing the opportunity to leverage close-knit networks by offering collective services and fostering resource pooling and information sharing among their members; on the other hand, they emerged also as acting as system coordinators, strategy designers, and providing a flexible structure for prompt collective decision-making at the destination level. These findings reveal that trade associations play a crucial role in facilitating coordination and cooperation within tourist destinations by fostering the development of bonding capital at the dyadic level and bridging capital at the systemic level.