Research Of Principal-agent Mechanism Model About Managers Based On The Reliability Factor For The Production And Management System

Incentive theory has always been a significant issue in management and management science. With the separation of control power and ownership in modern company, how the principal design or develop a reasonable incentive schema so as to improve the company’s performance and value has become a research focus in current corporate governance theory.In this study, on the basis of incentive theory of modern economics and the relevant knowledge of system engineering theory concerning the definition and calculation of reliability indexes, the enterprise internal reliability factors are introduced into the analysis of managers’ motivation model and four issues are studied in this thesis:(1)The concept of enterprise internal reliability is defined, and the reliability indexes are valued and calculated under the condition of considering enterprise as an operating complex system, which is the indispensable basis of three different managers’ motivation studies by combining the reliability indexes of enterprise system. (2)A new single-task principal-agent model for managers is structured by the union of the enterprise internal reliability indexes, which used to be overlooked but essential in previous motivation model, and this new model is subsequently solved and analysed. (3)Based on the reliability factors about a enterprise system, the long-term and short-term incentive model for managers is analysed. (4)Based on the reliability factors, the managers’ motivation model for multi-task principal-agent is analysed, and the result is explained under actual situation of the state-owned enterprises in China.Based on the relevant research of the domestic and international, this study has taken the enterprise internal reliability factors into the managers’ motivation model and discussed the management incentive theory under the relationship of single-task principal-agent , long-term and short-term principal-agent, and multi-task principle-agent with standard type research methods. The following conclusions are obtained:(1) Based on the research of managers’ motivation model for single-task principal-agent combined with the enterprise system reliability factors, for the supervision to operates can bring enterprise performance improvement. Whether or not taking natural state into account, under the condition of asymmetric information, the managers’ effort level and sharing incentive will be increased with the rise of reliability indexs of enterprise system, and the fixed income of managers will also be increased in initial stage, however, when the reliability indexs reaches to a certain level, maintaining the given reliability indexs will lead to the increased cost of business, so the rational principal will consider the overall operating costs and tend to decrease the fixed income of managers.(2) The research of long-term and short-term incentive model about managers reveals if reliability factors of enterprise system has some effort on the optimal remuneration for managers, the high reliability indexes in short-term will be helpful for the improvement of enterprise performances. However, high reliability indexes of enterprise system in long-term will be increasing the operating costs, so the principal may be forced to decrease the optimal remuneration for managers when the operating costs and effort costs for high reliability indexes rise faster than performance retunes. Moreover, with the increasing of risk-free bank interest rate, the short-term optimal remuneration for mangers will be decreasing, and the long-term optimal remuneration for mangers will be increasing.(3) Depending on system reliability factors for enterprise system, the research of multi-task principal-agent motivation model show that if the effort costs of these tasks for managers are independent each others, the optimal remuneration of managers is related to the operating costs, when operating costs rise faster than performance retunes, the optimal remuneration will be decreasing with the increase of operating costs for high reliability indexes, conversely, the optimal remuneration will be increasing accordingly; If the effort costs of these tasks about managers are related, when the efforts for a task can not be directly observed by principal, the relationship between the optimal remuneration of managers and reliability indexes is same to the case while the effort costs of these tasks are independent of each others. When the efforts for a task can be directly observed by principal, the optimal incentive threshold is inversely with the reliability indexes about the enterprise system.The main innovation and contribution in this study are as follows: (1) In this study, the knowledge about reliability in systems engineering theory is introduced to management science, and the reliability indexes about enterprise system are identified and calculated, which lay the foundations on the managers’ motivation studies by combining system reliability indexes. (2) Being aware of the possible effects of reliability factors to the incentive for managers, the reliability factors about enterprise system are introduced to the research of single-task principal-agent model about managers, and the result obtained would have practical significance. (3) In the research of long-term and short-term incentive model about managers, the introduction of reliability factors has established a foundation for the further study. (4) Reliability factors are taken into consideration in the research of multi-task principal-agent motivation model of managers, which would has great meaning for the formation of incentive contract for managers.