ABSTRACT
This chapter pursues the possibility that an efficiency rationale for joint venture activity can be developed that still recognizes the contractual and administrative problems involved in joint venture activity. The solution suggested here depends on distinguishing between costs incurred at business level and costs incurred at corporate level. Most analyses of co-operative activity fail to make such a distinction. Joint venture may well be an expensive solution when compared to merger alternatives at the level of the new venture, but it may have the virtue of avoiding the need for merger of diversified firms and a quantum leap in managerial diseconomies at the
level of the firm. It is suggested later in the paper that this point helps explain a variety of phenomena related to the evolution of collaborative activity.
