Research On The Impact Of "Executive-employee" Compound Equity Incentives On Innovation Performance In Founding Family Enterprises

Family enterprises have occupied an important position in China’s private enterprises after more than 40 years of rapid development,and founding family enterprises are the structural forms that account for a large proportion of this organizational form of family enterprises.Under the high speed competition in the market,how to improve the innovation ability and make it better to enhance the enterprise performance has become an important research issue in founding family enterprises.At the same time,the principal-agent problem arising from the inconsistent interests of owners and operators is more obvious in founding family enterprises,as the founder is usually the actual controller of the enterprise.As a good incentive tool,equity incentive can not only play a role in reducing agency costs and agency conflicts,but also stimulate employees’ motivation of production and R&D,and actively participate in the innovation activities of the enterprise,thus promoting the improvement of the innovation performance of the enterprise.However,the implementation of equity incentives and their effects vary greatly.Therefore,this paper takes this as an entry point to conduct a study on equity incentives and innovation performance in founding family firms.After defining executive-employee equity incentives and other related concepts,this paper not only analyzes executive-employee equity incentives in founding family companies,but also discusses the current status of incentives in the biomedical industry in which Sinocare is located.Next,we introduce the company and explore the history and plan of Sinocare Biotech’s executive-employee incentive program.Finally,we analyze the impact of executive-employee equity incentives on innovation performance and propose different innovation performance evaluation methods.Based on the analysis of the whole paper,the findings of this paper show that executive-employee equity incentives have different effects on each stage of innovation,and the effects of executive-core employee equity incentives and executive-extensive employee equity incentives are different in innovation input,innovation output and innovation transformation.In the founding family business,the equity incentive scheme is applicable to different stages of development.The executive-core employee equity incentive scheme is more suitable for the initial stage of development of the founding family business,and as the stage of development starts to change and the number of employees increases,the broad-based equity incentive scheme is more suitable.The executive-employee equity incentive package has a positive effect on the innovation performance of the founding family firms,and it has a positive effect on the innovation performance after the implementation of multiple periods of the executive-employee equity incentive package compared with that before the implementation of the equity incentive package.Finally,the paper makes suggestions in four aspects: the role of executive-employee equity incentives,the design of executive-employee equity incentive programs,internal and external supervision,and the evaluation of innovation performance.