Executive Incentive Model for Sustainable Enterprise Development Under Dual-Objective Orientation

Abstract

According to the requirement of sustainable development, enterprises should not only pursue the maximization of economic benefits but also take into account environmental benefits. Therefore, taking economic and environment benefits as dual objectives, this paper constructs an incentive model for executives considering both monetary and nonmonetary benefits. By distinguishing the competitive relationship between dual objectives and taking into account the influence of the natural state of the enterprise, this paper discusses the executive incentive in four situations, and the influence of each factor is verified by numerical simulation. The results show that the distinction of the competitive relationship between dual objectives and the consideration of the natural state play an important role in executive incentive. In the case of competition between dual objectives, there are complex relationships among the comprehensive allocation coefficient of the executive, the allocation coefficient of the executive effort level on economic benefits and the allocation coefficient of the economic benefits of the executive. In the situations considering the natural state, the benefit allocation coefficient and the effort level of the executive are positively related to the cognition of the natural state of the executive and the cognitive differences between the executive and enterprise and negatively related to the cognition of the enterprise to the natural state. The better the natural state of the enterprise is, the higher the effort level of the executive. The greater the positive difference of cognition is, the higher the benefit allocation coefficient and the effort level of executive.