Mechanism of Manager's Incentive and Technical Innovation

This paper analyzes,theoretically,the relationship between the mechanism of manager's incentive arrangement and technical innovation.Because the choice of manager's incentive arrangement impact on the technical innovation is an important of modern enterprise management.Further,paper through the use of White-Heteroskedasticity method that based on the cross-section and panel data of 372 Chinese listed companies in 7 industries from 2004 to 2007,the above qualitative analyses have been tested empirically.The conclusions are as follow :it can enhance the efficiency of innovation decision and resource allocation through implementing the incentive mechanism that managers have residual claim.One point which is worth emphasizing is that the effect of management stock-holding on technical innovation in state-owned enterprises is higher than that in non state-owned enterprises because the agency behavior of technical innovation derived from the separation of ownership and operation in state-owned enterprises is more serious than that in non state-owned enterprises.Accordingly,the paper proposes some suggestions of policy.