Abstract: The enterprise has two different kinds of innovation policys :the policy of encouraging the employee innovation and the policy of refusing the employee innovation.To encourage the employee innovation or to refuse the employee innovation is an important decision for enterprise.Based on the multiphase game model of the enterprise and the employee,this paper analyzes what factor will influence the enterprise's choice on two different kinds of innovation policys.This study has found that the greater the probability that the opportunity become commercial invention,the enterprise is more likely to choose the policy of encouraging the employee innovation;the greater the benefit that commercial invention produces, the enterprise is more likely to choose the policy of encouraging the employee innovation.When the opportunity is developed in the enterprise,the greater the employee can share the benefit of project,the greater the output of a given project,the smaller the risk of the risky project, and the greater the probability that the employees will find the opportunitiy,the enterprise is more likely to choose the policy of refusing the employee innovation.In the end,the management implications and limitations of this study are discussed.

Key words: employee innovation, innovation policy, game model