What are joint venture partners

joint venture

1. Term: specific form of cooperation. The equity joint venture is a legally independent joint venture between two or more partners with equity participation. The partner companies each have capital in the joint venture, jointly bear the financial risk of the investment and perform management functions in the joint company. The capital participation of the partner companies can vary; As a rule, the amount of equity participation influences the extent of the decision-making authority of the companies involved in the joint venture. In the case of a contractual joint venture, on the other hand, no joint venture is established, only contractual relationships exist that regulate the distribution of costs, risks and profits. As soon as the partners or the joint venture and the partners come from different countries, it is an international joint venture.

2. To shape: Joint ventures can be differentiated on the basis of numerous criteria. These include the number of cooperation partners, the area of ​​cooperation (restriction to one area such as a production joint venture vs. joint venture as a whole), the location, the geographical area of ​​cooperation, the equity participation (equal vs. unequal proportions of partners) and the time horizon of cooperation.

3. Motives: The main motives for setting up a joint venture are primarily the division of the entrepreneurial risk between two or more partner companies and the use of the partner company's local market knowledge. The combination of the strengths of one's own company with the strengths of the partner company enables the realization of synergy effects and competitive advantages.

4. Problems: The problems of joint ventures include, above all, competition law provisions, the high level of coordination effort, the outflow of know-how and often intercultural problems. Joint ventures are also prone to instability. This can be seen in their often limited lifespan.

See also international cooperation.