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Optimal Incentive Contract to Motivate Task Effort and Mutual Assistance for R&D Project within Virtual Enterprise

Mingze Li, Y unpeng Geng, an d Wenyi Sha
Hefei University of Technology, Hefei, China
Abstract—This paper studies an incentive contract design problem based on principal-agent theory in the context of virtual enterprise, which considers the mutual assistance behavior of agents and optimizes the total profit of virtual enterprise and completion time of project. Through modeling analysis, it is proved that mutual assistance helps to improve the effort level of agents in virtual enterprise. The results show that mutual assistance among agents in the virtual enterprise is beneficial to revenue increases and efficiency of management work. Under the action of incentive contract, individual's egoistic thought is affected to a certain extent to induce mutual assistance with benefits, thus obtaining greater benefits.
 
Index Terms—effort levels, R&D, incentive contracts, mutual assistance, virtual enterprise

Cite: Mingze Li, Yunpeng Geng, an d Wenyi Sha, "Optimal Incentive Contract to Motivate Task Effort and Mutual Assistance for R&D Project within Virtual Enterprise," Journal of Advanced Management Science, Vol. 8, No. 3, pp. 103-107, September 2020. doi: 10.18178/joams.8.3.103-107
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