Joint ventures:
A) Result in complete control by one firm
B) Incur low administrative costs
C) Entail a risk of opportunism by partners to the venture
D) Are desirable in all environments

Question

Quizplus · Accepted Answer

Joint ventures entail a risk of opportunism by partners to the venture. Joint ventures are partnerships between two or more firms to undertake a specific project or to pursue a specific goal. Both parties are equally responsible for the success or failure of the venture, and the venture creates a separate legal entity. However, since each partner has its own interests and goals, there is a risk that one partner may act opportunistically to the detriment of the other partner(s). Consequently, the partners must have a high level of trust and an effective governance structure to monitor and mitigate opportunistic behavior.

Joint Ventures