Risk Analysis on Product Innovation in View of Principal-Agency

How to promote the product innovation to reduce the risk of product innovation is researched by the scholars from the viewpoint mainly emphasized on the product creativity, design, production and marketing. It is discovered by the principal-agency model analysis that the proportion of innovator's cost compensation is raised to drive the innovational enthusiasm including both innovator and investor in the product innovation, thus the product innovation risk is reduced. If the assignment proportion of investor in innovation income is controlled in the scope of the ratio of capital contribution, both increase the enthusiasm in the product innovation. As a result the product innovation risk is reduced.