In recent years, with the comprehensive promotion of China's socialist modernization, our country has achieved significant economic growth, ranking second in the world in terms of GDP. However, it must be acknowledged that the growth model of the Chinese economy still remains relatively extensive, and the role of innovation in driving economic growth needs to be further enhanced. In this context, technological innovation is crucial for economic development. However, research on the impact of key technical personnel equity participation on innovation is relatively limited, and our understanding of its underlying mechanisms is also limited. In the stage of innovation-driven economic development, technological innovation is of utmost importance for technology entrepreneurship
enterprises. The government has implemented a series of measures to encourage technological innovation, including increasing the proportion of equity held by technical personnel. The innovative capabilities of technical personnel serve as the driving force
behind technological innovation and are of significant importance for enhancing the long-term competitiveness of enterprises.
Therefore, it is of great significance to investigate whether employee share ownership plans have a positive impact on innovation in
enterprises.

This paper aims to investigate the relationship and mechanism of the impact of key technical personnel equity participation on innovation performance in technology entrepreneurship enterprises. Using early-stage technology enterprises as research samples, the study explores the relationship between the implementation of employee share ownership plans (ESOPs) and technological innovation during the entrepreneurial phase. Through empirical analysis, several results contrary to the theoretical expectations were discovered. Firstly, for individual key technical personnel, equity incentives did not have the expected positive impact on innovation; instead, they could potentially have a negative effect on innovation performance and showed no significant influence on innovation quality. Further research revealed that general equity incentives had no significant impact on the quality of innovation performance in companies and could even have a self-significant negative effect on innovation performance. Restrictive equity incentives, on the other hand, showed a positive impact only on utility patents, while they did not have a significant positive effect on new product performance and invention patents. Additionally, knowledge sharing, innovation input, and innovation cooperation did not mediate these relationships. Secondly, from the perspective of the company, the equity participation of key technical personnel did not significantly enhance the company's innovation performance; instead, it could potentially have a negative impact on innovation performance. Further research indicated that general equity incentives did not play a positive promoting role in the company's
innovation performance, while restrictive equity incentives had a positive effect on the number of patents but had minimal influence on the market performance of technology commercialization (i.e., new product performance). Moreover, knowledge sharing,
innovation input, and innovation cooperation did not mediate these relationships; instead, they exhibited masking effects. The promotion effect of implementing equity incentives for key technical personnel on innovation performance is greater in non-state-owned enterprises than in state-owned enterprises. The promotion effect of implementing equity incentives for key technical personnel on innovation performance is greater in large-scale enterprises than in small-scale enterprises.

In response to these empirical findings contrary to expectations, we employed a case study approach to provide theoretical explanations. The research revealed that the equity incentives for key technical personnel did not have a positive impact on innovation mainly due to the following reasons: Firstly, the involvement of key technical personnel in management activities led to a dispersion of research and development focus. Secondly, research and development personnel became concerned with the realization of equity and
power struggles within the company, turning technological innovation outcomes into bargaining chips. Thirdly, there were flaws in the design of equity incentive schemes. Fourthly, horizontal inequity created negative incentives for research and development
personnel who did not receive equity incentives. Lastly, key technical personnel lacked a reasonable exit mechanism after acquiring equity. Based on these research findings, it is recommended that technology startups pay attention to the rational design of equity incentive plans to avoid negative impacts. Additionally, efforts should be made to ensure the concentration of key technical personnel's attention on research and development activities. Establishing effective knowledge sharing mechanisms
and enhancing innovation input and collaboration are crucial to improving innovation performance. Furthermore, providing key technical personnel with reasonable exit mechanisms can help reduce the negative effects of instability on innovation. Finally, policy
makers and business managers should develop differentiated incentive policies based on the nature and scale of the enterprise.