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Joint venture

Date post: 04-Nov-2014
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Joint Venture Joint Venture Company Inpu ts MNE Local Firm HOME COUNTRY HOST COUNTRY Inpu ts Share of Profit Share of Profit
Transcript
Page 1: Joint venture

Joint VentureJoint Venture

Joint Venture Company

Inputs

MNE Local Firm

HOME COUNTRY HOST COUNTRY

Inputs

Share of Profit

Share of Profit

Page 2: Joint venture

Joint VentureAdvantages

• Access to partner’s local knowledge

• Reduction of concern about overpayment

• Both parties have some performance incentives

• Significant control over operation

Disadvantages• Potential loss of proprietary

knowledge• Potential conflicts between

partners• Neither partner has full

performance incentive• Neither partner has full

control

When Is a Joint Venture Appropriate? Both partners contribute hard-to-measure inputs Large expected mutual gains in the long-run Trade secrets can be walled off


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