Joint Venture (5:40)

Joint ventures involve sharing ownership with one or more partner firms. The focal firm's ownership is less than 100% and may be less than 50% depending on the country. A disincion must be made between an equity joint venture - a type of partnership in which a separate firm is created through the investment or pooling of assets by two or more parent firms that gain joint ownership of the new legal entity and a non-equity joint venture, project-based ventures or alliances. The definitions in the literature here are inconsistent. Differences lie in the level of commitment, long-term prospects and whether or not a new company is being created.