Analysis Of The Incentive And Restraint Mechanisms Of Entrepreneurs In The State-owned Enterprises Based On The Theory Of Principal-Agent

Since the Third Plenary Session of the 11th Central Committee of the Communist Party of China, the economy system has experienced a huge transformation from the planned economy to the market economy, the market economy frame is preliminarily established, the reform of the state-owned enterprises has also made substantive progress, the overall strength of the state-owned enterprises strengthens continuously in the reform and the adjustment, the state asset is abundant day by day, the state economy is playing the extremely vital role in the entire national economy and the social development, but the state-owned enterprises also expose many problems in the developing process of the reform, for instant, the incentive and restraint of entrepreneurs in the state-owned enterprises, is a problem which urgently needs to be resolved .Under the market economy condition, in order to make the state-owned enterprises adapt the request of the fierce competition, raise their competition ability and vitality continuously, insure the state-owned property to protect value and increase in value, extremely important is to build up and perfect the incentive and restraint mechanisms of entrepreneurs, it directly relates to the enhancement of the entrepreneurs'quality and its troop's stability. At present, the incentive and restraint mechanisms of entrepreneurs in the state-owned enterprises are imperfect and deficient, this is currently the main problem and barrier which the state-owned enterprises meet as its reform deepens. Establishing and perfecting the incentive and restraint mechanisms of entrepreneurs in the state-owned enterprises which suit Chinese circumstance, developing the enthusiasm and potential of entrepreneurs from the system level, restraining their negative aspect, have important meaning to deepen the state-owned enterprises'reform and their health sustained development. Since the 1970s, a series of reforms have been launched, such as the separation of governments and enterprises, the broadening of the self-governance of the enterprises, system of yearly salary, etc. With the deepening of the degree of reform, a group of entrepreneurs surge up; they are brave to reform and innovate, diligent in management and abundant with achievements. However, due to the political environment, economic environment, social culture, the inner condition of the enterprises and other limitations, many enterprises are still under the traditional framework of system and keep the old system of distribution and mode of management. This causes the low efficiency in many state-owned enterprises.If an enterprise wants to be efficient in using resources and fulfill the prescribed social goals, the mechanisms of incentive can not be overlooked. The founding of effective mechanisms of incentive and constraint is of considerable significance in terms of theory and practice in the promotion of the reform of state-owned enterprises with the founding of modern system of enterprises as its goal. The paper first studies the significance of the selected topic, it explains both in theory and reality that it has vital significance to the reform of the state-owned enterprises to study the incentive and restraint mechanism of entrepreneurs in the state-owned enterprises. Then summarizes the theory of principal-agent and the incentive and restraint, the second part of the paper generalizes the development of principal-agent theory, the principal-agent relation, the incentive mechanism in the principal-agent frame. The third part analyses the principal-agent relation of Chinese state-owned enterprises. The principal-agent relation of Chinese state-owned enterprises is one kind of indirect principal-agent, the state-owned enterprises'initial trustees to the final agent's surveillance is also a indirect way, this causes the state-owned enterprises'principal-agent to have the following problems: The problem of insider control is prominent, the intermediary has dual statuses, the incentive and restraint mechanisms are ineffective to the final agent. In the paper I also give some suggestions to the principal-agent structure reform of the state-owned enterprises, including optimizing the property right structure of the state-owned enterprises, establishing entrepreneurs'incentive and restraint mechanisms. The fourth part analyses the present situation of the incentive and restraint mechanisms entrepreneurs in the state-owned enterprises, the incentive and restraint mechanisms of entrepreneurs in the state-owned enterprises at present mainly perform that the incentive and the restraint mechanism are insufficient. The incentive aspect mainly manifests in: The income level is somewhat low, the income structure is unreasonable and so on; the restraint aspect mainly manifests in: the inside and the outside restrains all do not arrive. The paper finally gives some suggestions to the incentive and restraint mechanisms of entrepreneurs in the state-owned enterprises, including the construction principle of the incentive and restraint mechanisms, construction of reward mechanism, construction of spiritual incentive mechanism - prestige mechanism, construction of the restraint mechanism and consummation of the legal framework. In the analysis of the construction of reward mechanism, the paper gives some simply introduction to the yearly salary system, the stock option and the operator owned stocks, points out that the basic characteristic of entrepreneurs'salary in the state-owned enterprises should link up with the enterprises'achievement, fully reflect entrepreneurs'market value. The state-owned enterprises of China universally exist some defects, for example, the property right is unclear, the owner is absent, the corporate governance structure is imperfect, as well as the restraint of the corporation is insufficient. In the state-owned enterprises of China, it is not only need to inspire and constrain agents, but also need to inspire and constrain clients; not only have to consider material incentive and constraint, but also have to consider the spiritual incentive and constraint, in addition, we have to consider the specific reality of the development stage of the entire economy and society.