What defines a "joint venture"?

A joint venture is best defined as a cooperation where two or more parties pool their resources for a specific project. This arrangement allows the participating entities to share both the risks and rewards associated with the project, which can take various forms, such as sharing technology, capital, or even management expertise. Joint ventures are often formed for specific objectives and usually do not involve the merging of the companies themselves; rather, they create a new business entity or project that operates independently for a limited duration or until the project is completed.

This definition highlights the collaborative nature of joint ventures, which is distinct from a merger, where two corporations combine to form a single entity. It also differs from long-term business commitments that may not focus on a specific project, as well as from acquisitions, which involve one company taking control over another. Joint ventures are typically formed to leverage complementary strengths, tap into new markets, or share high costs related to certain ventures.