Study On Management Compensation And The Effect And Efficiency Of R&D Investment

Science and technology is increasingly important for a country’s economic development, andR&D investment for the development of science and technology also increasingly indispensable.For China ’s manufacturing industry nowadays, there are some serious issues being confrontedby theorists and practitioners including finding ways to effectively motivate executives toactively expand the company’s R&D investment, and to actively makes the investment inresearch and development resources be fully utilized to achieve sustainable growth andvalue-added business. Significance of this study is to try to explore the relationship betweendifferent management compensation systems and the efficiency of R&D investment aftercontrolling a variety of other internal and external factors.This article will first establish a logical relationship between R&D investment efficiency andtotal factor productivity growth, which will then be on behalf of the efficiency of the R&Dinvestment. The purpose is to study how the relative executives’ compensation and the use oflong-term incentive plan affect the efficiency of R&D investment.Through this study, it is found that Chinese manufacturing listed companies comply with thebasic features of the original C-D functions, namely the sum of the flexibility of labor and capitalis1. After controlling factors such as the amount of investment in fixed assets, employee salaries,and so the amount of R&D investment, the paper found that there is no significant influence ofthe short-term pay grade over the efficiency of R&D. Yet enterprises which adopt a long-termequity incentives have a significant positive impact on the efficiency of R&D investment,specifically in order to improve total factor productivity growth.