Incentive Contract,Executive Team Heterogeneity And Corporate Innovation Performance

"The distance has disappeared,innovate or die!" Improving national innovation ability has become an important way for China to seize strategic opportunities and gain the leading position in scientific and technological competition with increasingly fierce competition among countries.Enterprise innovation activities occupy an important position in Chinese national innovation system.In recent years,with the continuous expansion of the proportion of enterprises’ innovation investment in national innovation investment and the increasing demand for high-quality innovation achievements in domestic and foreign markets,the improvement of enterprise innovation performance is not only related to the survival and development of enterprises,but also related to my country’s innovative effectiveness of national strategy implementation.On the one hand,due to the characteristics of innovation activities and the principal-agent problem formed by modern corporate governance structure,how to scientifically motivate corporate executives,stimulate their innovation enthusiasm and improve corporate innovation performance have attracted much attention and from many enterprises and scholars.On the other hand,incentive contracts directly affect individual executives,and the difference in demographic characteristics and growth experience of executives have a significant impact on their behavioral decisions.Therefore,the performance of incentive contracts will also be affected by the heterogeneity of the TMT.In this context,how to scientifically construct incentive contract combination and allocate senior management team to improve enterprise innovation performance needs more attention.This paper takes Shanghai and Shenzhen A-share listed companies from 2015 to 2020 as the research object,including the monetary compensation,equity incentive,and internal compensation gap of the TMT into the incentive contract,and selects the executive team’s professional background,education,age and tenure of four heterogeneity indicators,from the perspective of "input-output",calculate the innovation performance of enterprises through the DEA data envelopment analysis method,and study the role of the incentive contract of the executive team on the innovation performance of the company and the moderating effect of the heterogeneity of the TMT.Firstly,this paper reviews the relevant domestic and foreign literature on incentive contracts,TMT heterogeneity,and firm innovation performance,and summarizes the main viewpoints of the Principal-agent Theory,Tournament Theory,Equity Theory,Upper Echelons Theory,and Information Decision Theory,Social Identity Theory,and Technological Innovation Theory.Secondly,research hypotheses are proposed based on theoretical analysis,including the direct impact of incentive contracts on firm innovation performance and the moderating effect of TMT heterogeneity.Thirdly,the enterprise innovation performance indicators are calculated by the DEA-BCC model,and other indicators are summarized,sorted out,and calculated.Then,Stata 16.0 software was used to process and analyze the sample data,verify the research hypothesis,and carry out further research.Finally,according to the empirical results,the research conclusion is drawn,the relevant suggestions are put forward,and the shortcomings and prospects are pointed out.After theoretical analysis and empirical test,the research conclusions of this paper are as follows:(1)The monetary compensation incentive of top management team is not conducive to the improvement of enterprise innovation performance;(2)The equity incentive and the salary gap within the TMT significantly promote the innovation performance of enterprises;(3)The age heterogeneity of TMT has a significant negative moderating effect on the relationship between incentive contract and innovation performance,while tenure heterogeneity has a positive effect;(4)The occupational background heterogeneity of TMT positively moderates the impact of monetary compensation incentive and equity incentive on firm innovation performance,but has a negative effect on the intra-TMT compensation gap;(5)The degree heterogeneity of senior management team has no significant moderating effect;(6)Further research shows that incentive contract plays an important moderating role in the transformation from enterprise innovation input to innovation output,and the impact of incentive contract on enterprise innovation performance is realized through the difference between enterprise innovation input and innovation output.In view of the above research conclusions,this paper puts forward corresponding suggestions:(1)Enterprises should scientifically match the combination of incentive contracts,give full play to the different advantages of long-term and short-term incentive contracts,and promote the improvement of enterprise innovation performance;(2)Optimize the structure of senior management team,give full play to the positive effect of senior management team heterogeneity on enterprise innovation,and avoid or reduce the negative impact;(3)Through the combination of incentive contract terms and innovation performance improvement,the incentive effect is more targeted;(4)Strengthen executives’ understanding of the integrity of enterprise innovation activities,and realize the systematic coordination of enterprise innovation through scientific incentive means.The innovation of this paper is mainly reflected in the following aspects:First,the evaluation of enterprise innovation activity is regarded as a whole,and the evaluation index of enterprise innovation performance is constructed from the perspective of "input-output",Second,combining principal-agent theory and high-level echelon theory,this paper constructs a theoretical model of incentive contract,senior management team heterogeneity,and firm innovation performance,and makes clear the correlation between them.Third,through further research,this paper illustrates the path of incentive contracts’ impact on enterprise innovation performance,and reveals the "black box" in the relationship between the two,which is helpful to improve enterprise innovation performance and promote enterprise innovation development.