Management Contracting is a form of joint venture in which a local firm (foreign company) provides much or all of the management (management expertise, technical know-how) to a foreign firm that provides the capital. In this method, the local firm exports management services rather than products.
This approach is less risky than direct investment and is suitable when the company has valuable management expertise but does not want to invest capital abroad. The disadvantage is that the company generates income only from fees, not from property profits.
