What is a joint venture?

A joint venture is correctly defined as a business arrangement for a specific project or activity. This type of arrangement involves two or more parties coming together to collaborate on a particular business goal while retaining their individual identities. Each party contributes resources such as capital, expertise, or technology and shares in the profits, risks, and losses associated with the project.

This distinguishes a joint venture from a permanent partnership, which is typically established to conduct ongoing business operations without a defined end date. In contrast, a joint venture is often formed for a limited time frame and specific purpose, allowing the parties involved to focus on achieving a particular objective before dissolving or reevaluating the partnership.

Joint ventures are not mergers, which involve the combining of two corporations into a single entity, and they do not inherently involve price-fixing agreements, which can lead to anti-competitive concerns and legal issues. Thus, the definition that accurately encapsulates the nature of a joint venture is its focus on collaboration for specific projects or activities.