Abstract Innovation is a key factor for the survival and development of enterprises, and it affects the performance of enterprises. Based on tournament theory and social comparison theory, the paper studies the influence of the gap among executives’ external compensation on the mechanism of enterprise innovation, and the influence of the quality of corporate governance on this mechanism. The results show as follows: When the enterprise executive pay is higher than the industry average executive compensation, the external compensation gap can improve the enterprise innovation, the effect is more significant in non-state-owned enterprises and the high level of corporate governance; When the enterprise executive compensation is lower than the industry average executive compensation, managers’ sense of unfairness restrains the innovation. The effect is also more significant in non-state-owned enterprises and high level corporate governance. Further research shows that innovation input and innovation quality are positively correlated with enterprise value respectively.
2020, Vol. 37 
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