What is the Difference Between Joint Venture and Collaboration?
🆚 Go to Comparative Table 🆚The main difference between a joint venture and collaboration lies in the level of formality and the purpose of the arrangement. Here are the key differences:
Collaboration:
- Collaboration refers to the joining together of two or more entities for mutual benefit, with the purpose of working towards a common goal or undertaking a specific project.
- It is a more informal arrangement compared to a joint venture.
- Examples of collaboration include writers collaborating on a movie script, two persons collaborating to start a new business, or countries collaborating on specific issues.
Joint Venture:
- A joint venture is a strategic partnership where two or more people or businesses come together to achieve a shared commercial goal, often involving the creation of a new entity.
- It is a more formal business arrangement compared to collaboration.
- Joint ventures are typically formed for a specific project or purpose, and the participating entities share control and resources to establish the new venture.
- Joint ventures often have a limited duration and the agreement may be less complex compared to a general partnership.
In summary, collaboration is a more informal arrangement where entities work together for mutual benefit, while a joint venture is a more formal arrangement where entities pool their resources and expertise to achieve a shared commercial goal, often involving the creation of a new entity.
On this pageWhat is the Difference Between Joint Venture and Collaboration? Comparative Table: Joint Venture vs Collaboration
Comparative Table: Joint Venture vs Collaboration
Here is a table comparing the differences between joint ventures and collaborations:
| Joint Venture | Collaboration |
|---|---|
| A legal association between two or more parties, often for a specific project or purpose | A contractual arrangement involving a joint operating activity, where parties share economic risks and rewards |
| Parties pool resources and contribute their own expertise to accomplish a specific task | Entities share economic risks and rewards, and are active participants in the activity |
| Decision-making is made by the involved parties, sometimes leading to potential conflicts | Parties are exposed to significant risks and rewards, and are involved in the activity |
| Typically a temporary relationship, focusing on a single, defined project | The arrangement involves a series of contracts |
| Roles and responsibilities of each party are outlined in a joint venture agreement | The arrangement is a series of contracts, as defined in ASC 808 |
| Profits and liabilities are shared according to the joint venture agreement | Economic risks and rewards are shared as defined in ASC 808-10-20 |
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- Coordination vs Cooperation
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- Limited Partnership vs General Partnership
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- Social Enterprise vs Social Entrepreneurship
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