What is a joint venture?

A joint venture is defined as a strategic alliance where two or more parties collaborate to create a new business entity, pooling their resources and expertise to achieve shared objectives. This arrangement allows the involved companies to undertake projects while minimizing risks and capitalizing on each other's strengths. By forming a new entity, each partner can maintain their autonomy while benefiting from the collaborative efforts and shared investments.

The establishment of a separate legal entity in a joint venture also means that the partners can effectively manage the venture as a distinct business, which often spans specific projects or markets. This setup distinguishes joint ventures from other forms of partnerships or alliances, as it emphasizes the creation of a new structure that carries its own operational capabilities.

This definition clarifies the nature of joint ventures and illustrates their purpose within strategic management, enhancing understanding of how companies might leverage such arrangements for competitive advantage and innovation.