Incentive Problems Of The Industry Technology Innovation Strategic Alliance

The Industry Technology Innovation Strategic Alliance (ITISA) occurred in China in 2007 is a new kind of technology innovation cooperation organization. The research of it on theory and practice is yet in the exploration stage. There have been a variety of flashy and inefficient problems with the rapid development of it. It diverges drastically from the national original intention, "carrying out the independent innovation strategy, integrating the superior resources of innovation to research and develop the generic, key technologies in the key areas and strategic industries, promoting industrial technology innovation ability and core competitiveness, drive the upgrading of the industry". Some new negative factors, misreading of the ITISA’s connotation, excessive intervention by the government, aggravate the severity of the problems in some ways. And the research on the ITISA aimed at its peculiarities is few or superficial. The incentive research on it is almost blank.Starting with the analysis of the ITISA’s connotation and characteristics, referencing the existing research findings on the other kinds of alliances, how to motivate the ITISA by the government and against the opportunism tendency of "adverse selection" and "moral hazard" is discussed. It Aims to promote the healthy and efficient development of the ITISA, provide decision support for the government to guide and promote the development of the ITISA. The research mainly concludes the following aspects:First, analyze the properties, constitution, member relationship and risks of it by comparing it with other similar organizations to show off the new traits of its incentive problems. It concludes:as an innovation subject for promoting the national capability of independent innovation and the optimization, upgrading of industry, the ITISA is the industry-academy-research alliance on industrial level. Besides the common characters of the general alliances, the ITISA has some special particularities. Special goal, various members, asymmetric information, multiple risks determine the complexity, instability and special incentive problem of the ITISA.Then, aiming at the existing high management risk, technology risk and opportunistic risk in the ITISA, referencing existing researches on the other alliances, practical incentive mechanisms against the opportunistic risks such as "reverse selection" and "moral hazard" in the ITISA are discussed. The game models are built and proved by the examples. Some theories and methods like principal-agent theory, game theory, team production theory, mechanism design theory and project management theory are applied for the following study:1. In the formation stage of the ITISA, the alliance organizer is the principal, the membership applicants are agents. The strong supports and active promotion from the government bring so much expected benefits of resources and policies. So, the applicants are risk neutral. The conclusions can be got from the research:By setting the ranges of funds, preferential policy and sharable profits of each activity, designing membership rules, the organizer of the ITISA can motivate the risk neutral applicant to reveal his real capacity, the one with higher capacity participate into the alliance more actively, even can set capability threshold to the applicants implicitly.2. In the running stage of the ITISA, the relationship among the members is mutual principal-agent. They achieve the goal of the alliance and share the surplus of cooperation through mutual encourage and cooperative game, determine the benefit sharing mechanism through negotiation. The members are risk averse with high risks. The conclusions can be got from the model:the member will participate in the technological innovation more actively with higher output share proportion, higher production base and lower operation cost base of the alliance. But the individual utility of the member and general welfare of the alliance will increase first and then decrease with the increase of the member’s effort. They will present different trends with the sharing ratio of output since the members have different risk aversion degree. To the member with higher risk aversion degree, the marginal contribution of the output share proportion of utility will be less. So, the members’risk aversion degree should be considered carefully when use the output share proportion to motivate them.In addition, considering the function of the government in the development of this special co-operational organization, the support and incentive measures are discussed with examples next. It shows that as the pusher and guide of the ITISA, the government should not only care the economic benefit of it, but also its social benefit such as technical progress and industry upgrade. The government should motivate and guide the ITISA by creating a suitable, innovation-promoting external environment instead of participating the practical activities and sharing the cooperation surplus of the ITISA. The government’s support is not the bigger the better in the formation stage of the ITISA. The preferential policy should integrate with the funds and sharable profit to motivate the risk neutral applicant against the "reverse selection". In the running stage, the individual utility of the member and the general welfare of the alliance will increase with the increase of preferential policies.Finally, summarize the whole study and look forward to the further research on this theme.