Which of the following is NOT an advantage to a joint venture?
A) The local partner's reputation enhances access to local financial markets.
B) The local partner possesses technology that is advantageous in their market and perhaps beyond.
C) Higher agency costs than with a purely domestic firm.
D) The local partner's public image may enhance local sales.

Question

Quizplus · Accepted Answer

Higher agency costs are a disadvantage of a joint venture, not an advantage. Agency costs refer to the costs associated with managing and monitoring the relationship between different parties in a joint venture, including any conflicts of interest or divergent goals. These costs can be higher in a joint venture compared to a purely domestic firm where there is a single owner/manager.

Which of the Following Is NOT an Advantage to a Joint