JOINT VENTURE

An association of two or more individuals or com-
panies engaged in a solitary business enterprise for
profit without actual partnership or incorpora-
tion; also called a joint adventure.
A joint venture is a contractual business
undertaking between two or more parties. It is
similar to a business partnership, with one key
difference: a partnership generally involves an
ongoing, long-term business relationship,
whereas a joint venture is based on a single busi-
ness transaction. Individuals or companies
choose to enter joint ventures in order to share
strengths, minimize risks, and increase compet-
itive advantages in the marketplace. Joint ven-
tures can be distinct business units (a new
business entity may be created for the joint ven-
ture) or collaborations between businesses. In a
collaboration, for example, a high-technology
firm may contract with a manufacturer to bring
its idea for a product to market; the former pro-
vides the know-how, the latter the means.
All joint ventures are initiated by the parties’
entering a contract or an agreement that speci-
fies their mutual responsibilities and goals. The
contract is crucial for avoiding trouble later; the
parties must be specific about the intent of their
joint venture as well as aware of its limitations.