A Study of Incentive Theory and Its Operational Model

Designing the incentive system is an essential part of enterprise management.Stephen Ross has proposed a model of incentive system guided by the agency theory based on strict assumptions.However,this model fails to solve certain theoretical problems existing within the incentive system.In addition,the strictly conditioned assumptions have restricted wide application of this model.The author maintains that it is advisable to adopt carefully designed research methods to explore the current incentive system in China in order to find out the objective theory functioning in the incentive system.These can then be referred to as supporting theories in designing the incentive model,including values of enterprises,assessment of managers as human capital,and correlation of enterprise value and assessment of managers as human capital and so on.On the basis of this,the Stephen Ross model of incentive system can be modified from a dynamic perspective,the correlation between enterprise value and assessment of managers as human capital,and dual nature of the work of managers.