| Innovation is driving force behind development.As the main promoter of innovation activities,enterprises need to rely on continuous innovation and gain core competitiveness to stand out in the fierce market competition.However,enterprises may face the problem of being limited by key core technologies in the process of innovation,which requires seeking solutions to cope with innovation challenges.Enterprise executives,as the agent of the company,play a crucial role in the enterprise strategic planning and execution.However,innovation,as a major strategic decision,has a high agency cost,which will make risk-averse executives abandon innovation project that are beneficial for the long-term development of the company.Therefore,it is necessary to design a set of incentive mechanism to coordinate the interests of executives and shareholders,and encourage managers to take risks and carry out innovative activities.The incentives for executives in enterprises not only include internal incentives such as performance-based compensation and equity.With the development of the manager market,chief executive officers(CEO)who are in the top position of the company’s management.may also be affected by external incentive mechanisms,mainly including industry tournaments and local tournament incentives.Considering whether industry and regional tournament incentives will affect a company’s innovation behavior this paper will delve into the impact of local and industry tournament incentives on firm innovation,specifically for CEOs.First,based on principal-agent theory,social comparison theory,theories related to geographic segmentation of the executive labor market,and tournament theory,this paper sorts out the relevant factors that affect corporate innovation and the relevant literature on the impact of executive incentives on corporate innovation,and puts forward research questions.According to the research questions,this paper collects and sorts out the relevant data on the executive compensation of A-share listed companies,the total number of patent applications and the number of invention patent applications,and studies the impact of local and industry tournament incentives on corporate innovation.This paper draws the following conclusions through empirical research:(1)Local and industry tournament incentives promote enterprise innovation,specifically as the increase in incentives,the total number of patent applications and the number of invention patent applications of enterprises increase significantly.(2)R&D investment is a way to stimulate innovation.Local and industry tournament incentives increase the R&D investment of enterprises by reducing the risk aversion tendency of CEOs,thereby promoting enterprise innovation activities.(3)The frequency of CEO turnover and the mobility of the external labor market in the same region and the same industry increase the impact of local industry tournament as an incentive mechanism on firm innovation output,because as the frequency of CEO turnover and the mobility of the external labor market increase Larger,the firm is more likely to hire a more competitive CEO to lead the firm,then the CEO is likely to adopt a more innovative project to win the championship,which will promote the innovation output of the firm.This further confirms the causal relationship between local and industry tournament incentives and firm innovation output.(4)The heterogeneity analysis found that: when the company’s analysts pay more attention,the company is located in the central and eastern regions,and the company’s CEO is not close to retirement,the positive correlation between the local industry tournament incentives and the company’s innovation output is more significant.This paper adds new content to the related research on the factors that affect corporate innovation behavior,expands the research direction of championship incentives,provides an effective reference for the setting of incentive mechanisms for management in the same region and industry,and provides an efficient way for the innovation and development of the enterprises..It is beneficial for enterprises in different regions and industries to optimize the executive salary incentive system according to their own conditions,so as to further alleviate the agency problem,promote enterprise innovation,and ensure the long-term stable and prosperous development of enterprises. |
