An Empirical Research On The Relationship Between Effects Of CTO Incentive Mechanisms And Enterprise Innovation Investment

At present, we are in the age of Internet. High and new technology enterprises are becoming more and more dependent on increasingly innovation investment to cultivate the core competitiveness, realize the sustainable development. Keeping up with the pace of the times is the only way for high and new technology enterprises to extend life cycle. Increasing enterprise innovation investment and enhancing ability of independent innovation is a effective way to integrate internal resources, develop new technology, new function and new products.In the fierce market competition, enterprises’innovation investment ensures the continuous life vitality and rapid response to the changing demand. And it is the key measure to the transformation of consciousness-reactive enterprise.CTO, as a member of the senior management team, is in charge with innovation activities. According to the principal-agent theory, enterprise needs to establish and improve the agent incentive constraint mechanism to reduce agency cost. CTO is in charge with formulating the development of the enterprise strategic decisions, creating value for the enterprise. In terms of innovation investment, equity incentive mechanism and promotion mechanism can be applied to the CTO at the same time. When applied to the CTO, you need to discuss the relationship between two mechanisms. We need to ensure the CTO’s promotion incentives and whether there is a substitution effect between equity incentive or complementary effect in order to design the optimal incentive mechanism.Firstly, this article reviews the general theory and related research between the content of executives shareholding, pay dispersion among senior management team and enterprise innovation investment. Then the relationship between incentive mechanism of executives and enterprises’ innovation investment can be extended to the relationship between CTO incentive mechanism and the enterprises’innovation investment. We put forward some assumptions about this study. Based on high and new technology enterprises’ data from 2009-2013 covering information technology industry, electronics industry and industry of medicine, biological products, this paper studies the influence of CTO stockholding, pay dispersion between CEO and CTO on innovation investment. The results show that CTO stockholding and pay dispersion between CEO and CTO have positive influence on innovation investment significantly. As the rate of CTO share-holding increases, innovation investment can increase at the same time. In the meantime, CTO stock incentives and CTO promotion incentive have substitution effect on innovation investment. This paper also displays that CTO promotion incentive plays a larger role than CTO stock incentive on innovation investment.Finally, this article summarizes the shortcomings and the limitations of this study. Then we put forward the prospect related research and ideas in the future.