Incentive Contracts of R&D Personnel´s Technological Innovation Based on Organizational Slack

This paper establishes a principal-agent model of R&D personnel\´s technological innovation based on organizational slack on the condition of asymmetrical information. Through the analysis of the model, this paper obtains the optimal incentive contracts when R&D personnel engage in "technology innovating" and "getting organizational slack" simultaneously. The firm should optimize the incentives for "technology innovating" and "getting organizational slack" according to the interdependance of the cost functions between these two activities. Generally speaking, if R&D personnel\´s time of "technology innovating" is not limited tightly, the cost functions of "technology innovating" and "getting organizational slack" are complementary. So strengthening the incentives for the "technology innovating" of R&D personnel could not only promote their performance of "technology innovating" but also improve their performance of "getting organizational slack".