Research Of Incentives Mechanism For Entrepreneurs Based On Hypothesized Ownership

Incentive theory (firm theory) is the frontier of modern Economics. It set on the base of Principal-Agent theory. It studies the incentive problem when we face a state of incomplete information. How to inspire the agent is a very important problem to every modern company.Property right theory highlights the importance of ownership in incentives, so the necessity of ownership. Because they did not differentiate future ownership and now-owned ownership, they can not point out the nature of incentive. We want to set up a hypothesized ownership model to set the problem.There are four parts in this paper. In part one, we reviewed the firm theory. Limited by words, we just reviewed the main stream theory of firm theory. In part two, we recalled the problems which state-owned enterprises faced. We point out the defects of the theory before and give some advices. In part three, we set up a normal model, we study the incentive problem from the angle of hypothesized ownership. We think that it is the residual claim, but not the ownership, which matters in incentive.In part four, we propose that some change should happen in the incentive for entrepreneurs and the reform of state-owned enterprise. Give hypothesized ownership to the managers of state-owned enterprise, instead of MBO. In one thing, the problem of the loss of state-owned assets can be decreased, in another thing, the incentives for managers can be dissolved. The purpose of the paper is to give some advises to the reform of state-owned enterprise and the incentive of managers.