joint venture

Download Joint venture

Post on 04-Nov-2014

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  • 1. Inputs
    Share of Profit
    Joint Venture
    HOME COUNTRY
    HOST COUNTRY
    MNE
    Local Firm
    Share of Profit
    Inputs
    Joint Venture Company

2. Joint Venture
Advantages
Access to partners 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

3. Large expected mutual gains in the long-run 4. Trade secrets can be walled off