What is a Joint Venture?
A joint venture is a specific form of cooperation between several partner companies, each with its own capital invested in the joint venture. Together they bear the financial risk of the investment. In addition, they perform management functions in the joint venture.
The joint venture is usually implemented by establishing a new, independent company in which at least two companies have a stake with their capital. The motives can be manifold: Joint ventures serve, for example, to generate synergies in strategic corporate objectives. They are also useful for setting up subsidiaries with foreign companies across national borders.
Nevertheless, it should be noted that joint ventures are usually autonomous – they have their own business purpose. Among the problems that can arise are intercultural problems, the high coordination effort and competition law regulations. Joint ventures also tend to be unstable.