The main difference between an equity and a nonequity alliance is that
A) equity alliances are restricted to two partners while nonequity alliances may have any number of partners involved.
B) while equity alliances involve ownership, nonequity alliances are contractual relationships without ownership.
C) equity alliances require that each partner own an equal percentage of the new organization that is formed, while nonequity alliances involve unequal proportions of ownership between partners.
D) equity alliances are allowed between U.S. firms, but U.S. firms must make nonequity alliances with international firms.

Question

Quizplus · Accepted Answer

The main difference between equity and nonequity alliances is that equity alliances involve ownership in the new organization formed, while nonequity alliances are contractual relationships without ownership. In equity alliances, each partner owns a percentage of the new entity, while nonequity alliances involve partners sharing resources and capabilities but without forming a new entity. The number of partners involved is not a defining factor in determining whether an alliance is equity or nonequity. Similarly, there are no restrictions on whether U.S. firms can form equity or nonequity alliances with international firms.

The Main Difference Between an Equity and a Nonequity Alliance