Cross-Case Study on the Incentive Mechanism of Co-investment Projects in State Owned Enterprises from the Perspective of Employee Governance

Creating investment project is an important measure to increase the intrinsic vitality of state-owned enterprises and promote innovation. Considering the operability and purpose of investment projects, co-investment mechanism is the best choice. This article adopts the perspective of employee governance, using stakeholder theory and human capital theory to analyze co-investment projects in state-owned enterprises. It is found that a co-investment project is a contradictory unity of incentive and restraint for managers. Then, key factors of a successful investment mechanism are analyzed. This study provides theoretical guidance on innovation mechanisms for state-owned enterprises, and plays a certain reference role for the practice of co-investment. Introduction Innovation has become a powerful driving force for China's economic development. The state-owned enterprises in China, however, have been strongly restricted by institutional constraints under the background of public ownership leading economy. In innovation performances, the roles of state-owned enterprises employees, especially the core members like key decision makers and project executives, are indispensable. But these employees are seriously neglected in corporate governance. [1] The motivation of state-owned enterprises staff should be improved, too. How to increase the enthusiasm of state-owned enterprises employees through the design of enterprise internal system, so as to improve the level of employee governance, is the problem demanding prompt solution in the innovation practice of state-owned enterprises in China. The existing researches on employee governance mainly focus on the theoretical basis of employees' participation in governance and the comparison between Chinese and western patterns. Yong-cheng Luo analyzes the latest progresses and achievements on issue of employees' participation in corporate governance, comprehensively interprets various theories on employees' participation in corporate governance, and provides theoretical support for the following research. At present, most studies do not specifically study key factors and major parts of employee governance mechanism in state-owned enterprises. Therefore, this paper attempts to integrate previous researches, analyzes key factors on co-investment mechanism from the perspective of employee governance, and tries to solve the incentive problem of state-owned enterprises. Based on the comparative study of state-owned enterprises and non-state-owned holding enterprises, this paper attempts to solve the following questions: What are the main factors that make up the mechanism of state-owned enterprises? Which factors can influence core staff? How to combine these factors to achieve a win-win situation between the enterprise and employees, and promote the sustainable development of state-owned enterprises? Literature Review The necessity of co-investment projects. In previous studies, there were many different definitions on employee governance. Some scholars found that the term of "employee's participation in governance" can be used in a broad and a narrow sense. In narrow sense it refers employees' directly or indirectly involvement in the management of enterprises' internal affairs; in broad sense it 3rd International Conference on Economics, Social Science, Arts, Education and Management Engineering (ESSAEME 2017) Copyright © 2017, the Authors. Published by Atlantis Press. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). Advances in Social Science, Education and Humanities Research, volume 119