Incentive Mechanism Design For Collaborative Innovation With Innovation Investment Fund

Collaborative innovation brings many advantages for enterprises, such as superiorexternal resources, share costs and risks, synergy effects and so on. Therefore, it hasbecome the important mode of enterprises innovation. Meanwhile it gets supports fromgovernment. In The Third Plenary Session of the18th CPC Central Committee, it ispointed out that China should establish industry-university-institution-costumercollaborative innovation mechanisms to promote enterprises to become the main part ofinnovation.However, due to the lack of capital, adverse selection, unfair profit-sharing, andmoral hazard, the proportion of collaborative innovation succeeding is not high. As forthe lack of capital, Chinese government used to adopt direct financial funding model tosupport collaborative innovation. However, under this mode, due to informationasymmetry and the lack of expertise, it is hard for government to select the right project.Therefore, governments establishing funds of investment fund to attract social capitaland use the investment firms’ expertise in project selection, which is an indirect supportmode, has become an important mode of government supporting science andtechnology innovation.Though innovation investment fund has expertise in innovation project selection, itis still unable to completely solve adverse selection caused by information asymmetry.In addition, the moral hazard of industry, university and institution, such as reducinginvestment or “free ride”, and the unfair profit-sharing are the main factor hinderingthe scale expanding and efficiency improving of collaborative innovation. How to solvethe adverse selection, unfair profit-sharing and moral hazard is still a key issue tocollaborative innovation run successfully with investment fund.Aiming at the problems that adverse selection, moral hazard and unfairprofit-sharing causes low success rate of collaborative innovation, or even can not bereached, the paper studied how to design the incentive mechanisms such asprofit-sharing and valuation adjustment to prevent adverse selection and moral hazard,and make participant truthfully disclose their private information, raise innovationcommitment and promote the success of collaborative innovation. The result of thispaper provides a reference for investment funds, industries, research institutions,universities and governments making collaborative innovation decision. The main contents of this paper are as follows:①valuation adjustment mechanism for solving adverse selection in collaborativeinnovationThis section consists of chapter3"valuation adjustment mechanism design forcollaborative innovation between investment fund and industry". Considering anenterprise, who plans to invest an innovation projects with good market prospects, seeksa collaborative innovation with a capital fund due to the lack of capital, this chapterdeveloped a game model between innovation enterprise and capital fund to study howan innovative enterprise to solve the adverse selection in collaborative innovation due toasymmetric information through designing valuation adjustment mechanism. Thequalification for innovation enterprise and capital fund forming collaborative innovationand the optimal valuation adjustment mechanism is obtained through theoretical andnumerical analysis.②mechanism design for sharing profit fairly in collaborative innovationThis section consists of chapter4“profit-sharing mechanism design formulti-principal-multi-agent collaborative innovation” and chapter5“bargaingingprofit-sharing mechanism design for collaborative innovation with investment fund”.In chapter4, considering the two enterprises (outsourcers) individually cosign twoexternal independent agencies (suppliers) to develop a same new product, and there areinput spillovers due to the researchers’ communication, exchange or flow, or theexchange of technology information, a multi-principal and multi-agent R&Doutsourcing model with input spillovers is developed to study the R&D outsourcingpolicy of the outsourcers and suppliers. The optimal outsourcing policies of outsourcerand the optimal commitment policies of suppliers are obtained and the impact of inputspillovers on the commitment policies is analyzed.In chapter5, considering that due to the lack of capital, the enterprise not onlyconsigns innovation activities to an external research organization, but invite aninvestment fund to take part in the collaborative innovation, a bargaining game modelamong the enterprise, the research organization and the investment fund is presented tostudy their profit-sharing mechanism, according to the main characteristic ofcollaborative innovation, that is, the participants share profits through negotiation. Theeffects of the main parameters such as participants’ bargaining powers on theprofit-sharing mechanism are analyzed, and the optimal profit-sharing mechanism isobtained through theoretical and numerical analysis. ③profit-sharing mechanism for preventing moral hazard in collaborativeinnovationThis section consists of chapter6“the profit-sharing and investment mechanismfor collaborative innovation with investment fund”. Considering that an enterprise signa contract with a innovation supplier to outsource the new product developmentactivities to it, and invite a investment fund to join in collaborative innovation, a modelof collaborative innovation with investment fund is developed to study how theinvestment fund incentives the enterprise and the innovation supplier to raise theirinvestment in collaborative innovation through designing a reasonable profit-sharingmechanism. The optimal profit-sharing mechanism and the investment fund’sinvestment policy are obtained through theoretical and numerical analysis.The main distributions of this paper are as follows:①designed a valuation adjustment mechanism for collaborative innovationbetween the investment fund and the enterprise to solve adverse selection throughestablishing a game model between innovation enterprise and investment fundIn most of the existing collaborative innovation studies, the party of informationdisadvantage adopts information screening approach to solve adverse selection. In thispaper, the party of information superiority (enterprise) adopts signal transmission(proposing a valuation adjustment agreement) to make the investment fund believe theprivate information transmitted to it is true. As a result, the adverse selection is solvedand collaborative innovation is formed. The qualification of forming collaborativeinnovation and the optimal valuation adjustment agreement are obtain throughtheoretical and numerical analysis.②designed the collaborative innovation profit-sharing mechanisms to solve theproblem of unreasonable profit-sharing through respectively establishiing amulti-principal multi-agent collaborative innovation game model with input spilloversand a cooperative bargaining game model with investment fundFirstly, considering two enterprises individually consign two external independentresearch organizations to develop the same new products, and there are input spilloversin innovation, a multi-principal multi-agent collaborative innovation game model withinput spillovers is presented to find the optimal profit-sharing policy and the optimalinvestment policy of the research organization, besides, the effects of input spillovers onthe optimal investment policy are analyzed. Secondly, aiming at that the most existingresearches adopts non-cooperative game such as Cournot or Stackelberg to analyze collaborative innovation, which belongs to cooperative game, as well as the reality thatcollaborative innovation is generally formed through negotiation, a cooperativebargaining game model with investment fund is established to study the profit-sharingmechanism among the investment fund, the enterprise and the research organization,and analyze the effects of bargaining power of the parties on the profit-sharingmechanism.③designed the profit-sharing arrangement and phased investment mechanism incollaborative innovation to prevent the problem of moral hazard through establishingcooperative innovation game model with investment fundA collaborative innovation game model among the investment fund, the enterpriseand the research organization is developed to study how the investment fund incentivethe enterprise and the research organization to raise their investment and enhancecollaborative innovation investment scale and performance through designing theprofit-sharing mechanism and phased investment policy. The results of this chapterprovide new ideas and methods for preventing moral hazard of enterprises or researchorganizations through designing phased investment mechanism.