Insider and Outsider Joint Ventures
The two basic joint venture types are insider joint venture and the outsider joint venture.
The Insider joint venture type focuses on developing a product through the joint effort by the parties to the agreement. All parties share ownership and have equal access to the various functional departments of the business, such as administration, accounting, sales records, and others, and share critical knowledge to develop the product.
Some types of insider joint venture include:
- combining intellectual assets for joint research and development
- setting up combined product testing facilities
- sharing office space or production facilities
Outsider joint venture focuses on the function or the process. Each party to the joint venture takes responsibility for a particular function of a common product. For instance, one company, which has developed a product, strikes a joint venture with another company to market the product. The product remains common among the JV partners, and each partner has their own necessary functions such as administration, sales, and the like.
The outsider joint venture type is widely used in internet and marketing.