Discuss the four key differences between project-based, nonequity ventures and
equity ventures.
Chapter 15
Foreign Direct Investment and Collaborative Ventures
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International Business: The New Realities, Global
Edition, 3e (Cavusgil)
Cavusgil, 3edition, Foreign Direct
Investment and Collaborative Ventures, FDI, CollaborativeVentures, Chapter15
Answer: Project-based collaborations differ from the traditional equity joint ventures in four important ways. First, no new legal entity is created; partners carry on their activity within the guidelines of a contract. Second, parent companies do not necessarily seek ownership of an ongoing enterprise; they simply contribute their knowledge, expertise, personnel, and monetary resources in order to derive knowledge or other benefits. Third, collaboration does not last indefinitely; it tends to have a well-defined timetable and an end date; partners go their separate ways once the objectives have been accomplished or the partners find no reason for continuation. Fourth, the nature of collaboration is narrower in scope, typically revolving around one or more R&D project, new products, marketing, distribution, sourcing, or manufacturing.
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