The Firm's Nature and Income Distribution Based on Knowledge

The paper re-discusses the firm's nature and the model of income distribution decided by the theory.In the new economy,the enterprise is the nexus of contracts between financial capital owners and human capital owners.Financial capital and all kinds of knowledge that an enterprise possesses or controls,and the ability of absorbing,accumulating,creating,and applying its knowledge and financial capital decide efficient boundary of an enterprise.Stock option is not only a kind of incentive system,but is a transformation of the enterprise's ownership based on knowledge,and then leads to an inevitable outcome of the change of income distribution system.Finally,the paper clarifies the model of income distribution based on profit,and concludes that income distribution should be based on EVA to embody the value of human capital and its capability of producing value.