Research On The Impact Of Executive Compensation On Corporate Innovation Performance

At present,China is in an important period of economic transformation and changing development mode.The implementation of innovative development strategy,the cultivation of innovative enterprises,and the systematic improvement of innovation capacity of various subjects,those approaches have effectively promoted the sustainable growth of China’s market economy.The essence of innovation driven is talent driven.In modern enterprises,the decision-making power of innovation strategy is in the hands of the senior management team.Therefore,the implementation of people-oriented,respecting the value created by innovation,stimulating the enthusiasm and creativity of senior managers are conducive to the improvement of enterprise innovation performance.Based on the above background,this paper studies the influence of executive compensation incentive on corporate innovation performance.And investigates the relationship between them from the perspective of political correlation.Through the collation and induction of the existing relevant literature,this paper combs the logical relationship between executive compensation incentive and innovation performance based on principal-agent theory and human capital theory.And it analyzes the adjustment path of political correlation between executive compensation and innovation performance based on higher-order theory and social capital theory.Then it puts forward the corresponding assumptions.This paper divides executive compensation into three different salary incentive models: monetary compensation,onthe-job consumption and equity compensation.It divides political connection into political connection and no political connection,central and local political connection,and studies the influence of political connection between executive compensation and enterprise innovation performance.Based on the research sample of A stock manufacturing listed companies from 2010 to 2017,this paper carries out regression test and robustness test of balanced panel data model around the research content.In addition,in the further research,the innovation performance output is divided into exploratory innovation and development innovation.This paper discusses the impact of executive compensation on different types of innovation performance output,and the regulatory effect of the nature of property rights between executive compensation and innovation performance.The results show that: firstly,executive monetary compensation,on-the-job consumption and equity compensation all have a positive impact on corporate innovation performance;secondly,political connection plays a regulatory role between monetary compensation and innovation performance,and only local political connection can strengthen the positive impact of monetary compensation on innovation performance;thirdly,the positive relationship between executive compensation and innovation performance in non-state-owned enterprises has been strengthened.Based on the results of the study,this paper draws a conclusion,analyzes the causes,and puts forward policy suggestions from the two aspects of enterprises and government.In order to improve the enthusiasm and effectiveness of innovation activities,enterprises should pay attention to executive compensation incentive system,reasonably formulate executive compensation incentive system,and combine short-term incentive with medium and long-term incentive.At the same time,enterprises should make full use of the social capital of external political connection,carry out innovative activities in a scientific and efficient way,and practically promote the implementation of innovation investment decisions of enterprises.The government should speed up the construction of formal systems such as innovation related laws and regulations and financial system,standardize the allocation of local innovation resources,strengthen the policy support for the investment of innovation resources in private enterprises,and ensure the rational allocation of innovation resources.