International joint ventures: theoretical considerations

A study was done to analyze joint ventures of multinational corporations when they serve a host market. Models were constructed to evaluate the effects of profit sharing, cost reductions, risk reductions and competition reductions on the profits from such ventures. The models show that multinational corporations from joint ventures when there is strong competition and operational risks are present. The level of significant costs determine the choice between mutinational corporations and subsidiaries. Finally, multiple licensing is done when there are many local companies.