Affiliations: School of Economics and Management, Nanjing University of Aeronautics & Astronautics, Nanjing, China
Correspondence:
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Corresponding author. Shanting Wei, School of Economics and Management, Nanjing University of Aeronautics & Astronautics, Nanjing, China. E-mail: wstsnowy@nuaa.edu.cn.
Abstract: Network-based incubation has undergone rapid developments and the incubation mechanism has begun to change recently. To incentive the start-ups on the basis of ensuring its own interests, the incubator needs to design a feasible contract. According to network theory, a single network cannot adequately describe the heterogeneous alliances of incubated start-ups in the business incubator. Therefore, by constructing super-network structure of incubated start-ups, this paper designs two types of linear incentive contracts and uses numerical simulation to further discuss the model. The results indicate that the business incubator should design the contract according to the different capability levels and risk preference degree of start-ups: linear screening contract (LSC) is more effective to motivate the incubated start-ups to improve the capability, while the incentive effect will be weakened by the increasing proportion of high-capability start-ups; for high risk-preference start-ups, linear pooling contract (LPC) is superior than LSC. The results can serve as a theoretical direction for the business incubator to effectively distinguish different capability levels of start-ups and make better decision on contract design to motivate start-ups on the basis of ensuring the maximization of its own utility.
