Alleviating Financing Constraints of SMEs through Supply Chain
Round 1
Reviewer 1 Report
That paper have potential to have higher quality if you will add some review from papers about Value-Based Working Capital Management.
Author Response
Response to Reviewer 1 Comments
We would like to express our sincere thanks to you for the professional review work on our manuscript. The constructive and positive comments from you means a lot to us. We tried our best to improve the manuscript and made revisions according to the comments and suggestions and hope that the revised manuscript would be able to meet your standards.
The main revisions of our manuscript including:
Firstly, we have rewritten the introduction to highlight the definition of the specific problem addressed in our study. In this section, we explain the background, objectives, and structure of our study.
Secondly, a new section (section 2: literature review) is added in the revised manuscript to make a comprehensive literature review. We review the literatures related to our study from three aspects: SMEs and their financial constraints, information asymmetry, and supply chain finance and sustainability.
Thirdly, we have rewritten and reorganized the core part, theoretical framework, of our study. In the revised version, we focus on providing economic explanations for our framework. A Figure (Figure. 2) is added and some explanations for economic consequence and managerial implication is provided in this part.
At last, the final part, discussions and conclusions, is also rewritten by us. In the revised manuscript, this part first concludes our mathematical framework and explains the economic consequence derived from our conclusions from three main aspects. Then we interpret the contributions and managerial implication of our findings. And at last the limitations of the study and possible further research directions are discussed.
Point by point responses to the comments are listed as follow
Point 1: That paper have potential to have higher quality if you will add some review from paper about Value-Based Working Capital Management.
Response 1: We thank you very much for giving us such an opportunity. Following your nice comments, some review from paper about value-based working capital management is added, as a part of our literature reviews for supply chain finance and sustainability, in our revised manuscript.
Reviewer 2 Report
My main doubt about this paper is the conceptual framework – the literature review , that would provide a clear understanding of the motivation behind the construction of ‘tripartie’ model and the premises of the assumption of particular relationships/influences applied in the model. Below I refer more in detail to these issues.
Introduction, lines 66-72 – Authors recall researches concerning mechanism of SME financing – but there are no literature references (?) – please provide which research (Authors) and the context
Introduction – I strongly recommend to add some quotations with reference to the term ‘financial constraints’ (there is a large body of the literature on this topic, with research dated back to late 1990s) – the financial constraints could be analysed from many different angles and it should be explained that in this paper Authors focus on a limited access to debt financing (as they consider further the bank in the ‘tripartie’ model). Further, it should be motivated why Authors explore the impact of information asymmetry in this context. Authors just purely state that information asymmetry is ‘one of the main causes of the financing problems for SMEs’ (in conclusions) – but do not explain why and how it is understood. SMEs face financial constraints (in borrowing) mostly due to their weak financial situation/position (which is often related to the sector of performance). Thus, the motivation behind constructing the model with reference to financial constraints in SMEs and information asymmetry is insufficient in this paper (as for an academic work).
In my opinion, a deficit in this context is confirmed by a lack of a mention of the originator of information asymmetry theory (G.Akerlof – a winner of a Nobel Prize). It suggests that the literature review is very superficial in this paper in all contexts: information asymmetry, financial constraints and supply chain.
The model section – my only comment is that it is very mathematical and may meet a limited understanding of a reader. Why? – because the insufficient theoretical background of the study… It is not clear why these particular interdependencies are considered. I hoped that I will find some explanation in conclusions – but the conclusions are also very superficial…
Anothr relevant drawback of this study is its contribution to the problems related to sustainability.... Authors should clearly place their study within the sustainability-related context.
Author Response
Response to Reviewer 2 Comments
We would like to express our sincere thanks to you for the professional review work on our manuscript. The constructive and positive comments from you means a lot to us. We tried our best to improve the manuscript and made revisions according to the comments and suggestions and hope that the revised manuscript would be able to meet your standards.
The main revisions of our manuscript including:
Firstly, we have rewritten the introduction to highlight the definition of the specific problem addressed in our study. In this section, we explain the background, objectives, and structure of our study.
Secondly, a new section (section 2: literature review) is added in the revised manuscript to make a comprehensive literature review. We review the literatures related to our study from three aspects: SMEs and their financial constraints, information asymmetry, and supply chain finance and sustainability.
Thirdly, we have rewritten and reorganized the core part, theoretical framework, of our study. In the revised version, we focus on providing economic explanations for our framework. A Figure (Figure. 2) is added and some explanations for economic consequence and managerial implication is provided in this part.
At last, the final part, discussions and conclusions, is also rewritten by us. In the revised manuscript, this part first concludes our mathematical framework and explains the economic consequence derived from our conclusions from three main aspects. Then we interpret the contributions and managerial implication of our findings. And at last the limitations of the study and possible further research directions are discussed.
Point by point responses to the comments are listed as follow
Point 1: My main doubt about this paper is the conceptual framework – the literature review, that would provide a clear understanding of the motivation behind the construction of “tripartite” model and the premises of the assumption of particular relationships/influence applied in the model.
Response 1: We feel great thanks for your professional review work on our manuscript. As you are concerned, there are several problems in our literature review that need to be addressed. In the revised manuscript, in order to provide a clear understanding of the motivation behind the construction of our framework and assumptions applied in the framework, an absolutely major revision is conducted by us. In the revised version, we rewrite the introduction and add a new section for literature review.
Point 2: Introduction, lines 66-72 – Authors recall researches concerning mechanism of SME financing – but there are no literature reference (?) – please provide which research (Authors) and the context
Response 2: We feel sorry that we did not provide enough information about the background of SME financing. In the revised manuscript, we add a new section for literature review including three parts: SMEs and their financial constraints, information asymmetry, and supply chain finance and sustainability. In the section 2.1 and part of section 1, we discuss the mechanism of SME financing in detail and provide the related literatures (authors) and the context.
Point 3: Introduction – I strongly recommend to add some quotations with reference to the term ‘financial constraints’ (there is a large body of the literature on this topic, with research dated back to late 1990s) – the financial constraints could be analysed from many different angles and it should be explained that in this paper authors Authors focus on a limited access to debt financing (as they consider further the bank in the ‘tripartite’ model).
Response 3: Thanks very much for your suggestion. According to this comment, in section 1, we first review literatures pertaining to financial constraints, especially the financial constraints of SMEs (paragraph 3, section 1 in revised version). Then different aspects of SME financing including equity financing and debt financing is discussed by us (paragraph 4, section 1 in revised version). After that we argue that due to the problem of information asymmetry, tax shield, and other concerns, SMEs is encouraged to rely on loans instead of other financing sources. At last, numerous literatures of debt financing is reviewed by us to explain why the limited access to debt financing is important to SMEs (paragraph 5, section 1 in revised version).
Point 4: Further, it should be motivated why Authors explore the impact of information asymmetry in this context. Authors just purely state that information asymmetry is ‘one of the main causes of the financing problems for SMEs’ (in conclusions) – but do not explain why and how it is understood. SMEs face financial constraints (in borrowing) mostly due to their weak financial situation/position (which is often related to the sector of performance). Thus, the motivation behind constructing the model with reference to financial constraints in SMEs and information asymmetry is insufficient in this paper (as for an academic work).
In my opinion, a deficit in this context is confirmed by a lack of a mention of the originator of information asymmetry theory (G.Akerlof – a winner of a Nobel Prize). It suggests that the literature review is very superficial in this paper in all contexts: information asymmetry, financial constraints and supply chain.
Response 4: Thanks much for your professional comment. Your suggestion really constructive to us. It would be more understandable if we provide a comprehensive literature review on information asymmetry.
According to your comment, we add a new section, section 2.2, to review the literatures pertaining to information asymmetry. In this section, firstly, the origin of literatures on information asymmetry including the study of George A. Akerlof in 1970 is reviewed. Secondly we focus on the principal-agent framework. Driving from previous researches, we emphasize that the information asymmetry is a major factor leading to financing difficulties for SMEs. At last we explain the relationship between information asymmetry and supply chain finance. In addition, we rewrite the introduction in revised manuscript. We explain why information asymmetry should be incorporated in our framework (paragraph 6, section 1 in revised version).
Point 5: The model section – my only comment is that it is very mathematical and may meet a limited understanding of a reader. Why? – because the insufficient theoretical background of the study… It is not clear why these particular interdependencies are considered. I hoped that I will find some explanation in conclusions – but the conclusions are also very superficial…
Response 5: Thank you very much for the constructive comment. It really a giant problem to our manuscript. In order to explain our theoretical framework more clearly, we rewrite the main body of our mathematical model, and reorganize the section of theoretical framework. In the revised manuscript, we focus on the economic explanations and managerial implication of our model. The major revisions are also conducted in the section of conclusions. In the section 4 of revised version, we conclude our mathematical framework and explain the economic consequence derived from our conclusions from three main aspects. At last the contributions and limitations of our study and in this section.
Point 6: Another relevant drawback of this study is its contribution to the problems related to sustainability.... Authors should clearly place their study within the sustainability-related context.
Response 6: Thank you for the comment. In our revised manuscript, we first explain the sustainable background of our study in section 2.3. And then in the main body of our revised version, section 3, the theoretical framework is proposed within the sustainability-related context. At last in section 4, discussions and conclusions, we further explain the contribution of our study for sustainable supply chain.
Reviewer 3 Report
This is an interesting article on a topic of high interest and it is my pleasure to review it.
The research is solid and based on rigorous analysis. However, the mathematical approach should be doubled with economic interpretations and more emphasis on the economic, theoretical and practical implications would be beneficial.
My suggestions for the authors are as follows:
Introduction section could be re-written in order to reflect more the objectives and the structure of the paper, and some of the content should be moved into a new section literature review. The core part could be structured in a more readable way, for example as Research Methods and Discussion
Data and figure referring to the importance of SMEs (jobs, incomes) in Pakistan or China economies are rather old (2011, and 2013 respectively). Moreover, it is not clear why only China and Pakistan have been chosen. Probably China is relevant in size and importance; however what is the relevance of Pakistan? In this case, the authors should also present information and data from other contexts - regions, countries with different levels of development etc.
The paper contains a series of ideas, theorems and assumptions that have little and uneven connection with reality. Some hypotheses appear to be artificially created and then mathematically demonstrated. The real problems of SME financing are elsewhere.
It is not sufficiently and practically explained (with figures, contexts, cases etc.) how real is the problem, so it solving will ask such a construction. The literature, although correct in the general part, is poor in defining specific problems, which are (subsequently) analysed and solved with a consistent mathematical tool.
The final section should include not only the Conclusions (which can be more focused on the effective implications of the findings and how they could be used for economic policy purposes), but also applications of the findings, limitations of the study, possible further research directions etc.
It is necessary to improve the formatting /editing of the text.
References both in text and in the References section (final) are not written in the mdpi style.
Some phrases are confuse: Although the participation of supplier is very important for SMEs to access to financial support by bank …
Author Response
Response to Reviewer 3 Comments
We would like to express our sincere thanks to you for the professional review work on our manuscript. The constructive and positive comments from you means a lot to us. We tried our best to improve the manuscript and made revisions according to the comments and suggestions and hope that the revised manuscript would be able to meet your standards.
The main revisions of our manuscript including:
Firstly, we have rewritten the introduction to highlight the definition of the specific problem addressed in our study. In this section, we explain the background, objectives, and structure of our study.
Secondly, a new section (section 2: literature review) is added in the revised manuscript to make a comprehensive literature review. We review the literatures related to our study from three aspects: SMEs and their financial constraints, information asymmetry, and supply chain finance and sustainability.
Thirdly, we have rewritten and reorganized the core part, theoretical framework, of our study. In the revised version, we focus on providing economic explanations for our framework. A Figure (Figure. 2) is added and some explanations for economic consequence and managerial implication is provided in this part.
At last, the final part, discussions and conclusions, is also rewritten by us. In the revised manuscript, this part first concludes our mathematical framework and explains the economic consequence derived from our conclusions from three main aspects. Then we interpret the contributions and managerial implication of our findings. And at last the limitations of the study and possible further research directions are discussed.
Point by point responses to the comments are listed as follow
Point 1: The research is solid and based on rigorous analysis. However, the mathematical approach should be doubled with economic interpretations and more emphasis on the economic, theoretical and practical implications would be beneficial.
Response 1: Thank you very much for the constructive comment. It really a giant problem to our manuscript. In order to explain our theoretical framework more clearly, we rewrite the main body of our mathematical model, and reorganize the section of theoretical framework. In the revised manuscript, we focus on the economic explanations and managerial implication of our model. The major revisions are also conducted in the section of conclusions. In the section 4 of revised version, we conclude our mathematical framework and explain the economic consequences derived from our conclusions from three main aspects. At last the contributions and limitations of our study and in this section.
Point 2: Introduction section could be re-written in order to reflect more the objectives and the structure of the paper, and some of the content should be moved into a new section literature review. The core part could be structured in a more readable way, for example as Research Methods and Discussion
Response 2: Thanks for your constructive comment and nice suggestion. According to your suggestion, we first rewrite the introduction to reflect the background, objectives, and structure of our study. Then we add a new section to review literatures related to our study from three aspects including: SMEs and their financial constraints, information asymmetry, and supply chain finance and sustainability. At last we rewrite the core part of our framework to focus on the explanations of economic consequence and managerial implication. In addition, we also reorganize the section of theoretical framework of our revised manuscript.
Point 3: Data and figure referring to the importance of SMEs (jobs, incomes) in Pakistan or China economies are rather old (2011, and 2013 respectively). Moreover, it is not clear why only China and Pakistan have been chosen. Probably China is relevant in size and importance; however what is the relevance of Pakistan? In this case, the authors should also present information and data from other contexts - regions, countries with different levels of development etc.
Response 3: Thanks for your suggestion. We feel sorry that we did not provide latest data and enough evidence to support our argument. In our revised manuscript, including section 1 and section 2.1, we provide a cross-country evidence for the importance of SMEs. Besides, the latest data from specific developed and developing countries, such as China, US, UK, is also provided to support our argument.
Point 4: The paper contains a series of ideas, theorems and assumptions that have little and uneven connection with reality. Some hypotheses appear to be artificially created and then mathematically demonstrated. The real problems of SME financing are elsewhere.
Response 4: Thanks for your comment. According to the comment, we rewrite the theoretical framework to make more explanation for our model. In the revised manuscript, we focus on economic consequence and managerial implications in our writing. And we also interpret the realistic background of the assumptions proposed in our study.
Point 5: It is not sufficiently and practically explained (with figures, contexts, cases etc.) how real is the problem, so it solving will ask such a construction. The literature, although correct in the general part, is poor in defining specific problems, which are (subsequently) analysed and solved with a consistent mathematical tool.
Response 5: Thanks very much for your professional comment. This drawback may due to lack of explanation of the background of our study. In order to definite the specific problem addressed in our study, we first rewrite the introduction to provide explanation of the background and origin of our study. And then a comprehensive review of literatures related to our study is conducted to illustrate the contribution of our study and how real the problem we investigated is.
Point 6: The final section should include not only the Conclusions (which can be more focused on the effective implications of the findings and how they could be used for economic policy purposes), but also applications of the findings, limitations of the study, possible further research directions etc.
Response 6: Thanks for your constructive suggestion. According to our suggestion, we rewrite the final section. The final section in our revised manuscript first concludes our mathematical framework and explains the economic consequence derived from our conclusions from three main aspects. Then we interpret the contributions and managerial implication of our findings. And at last the limitations of the study and possible further research directions are discussed.
Points 7: It is necessary to improve the formatting /editing of the text”, and “Some phrases are confuse: Although the participation of supplier is very important for SMEs to access to financial support by bank …
Response 7: Thanks for your careful checks and constructive suggestion. We feel sorry for our carelessness and poor writings. According to your suggestion, two professors have helped to proofread our manuscript. Besides, the manuscript is also edited by a professional editing service to ensure the language quality.
Point 8: References both in text and in the References section (final) are not written in the mdpi style.
Response 8: Thanks very much for porting out this problem. In the revised manuscript, the references both in text and in the references section are written in the mdpi style.
Round 2
Reviewer 2 Report
Dear Authors,
I am happy that my comments helped you to improve the paper, I am very pleased with the work you did. I hope that you will continue research in this topic and test your model with real dataset.
Reviewer 3 Report
Thank you for submitting the new version of the paper.
In this form, the manuscript is much improved. Economic interpretations and managerial implications are well-placed and valuable; they increase the significance and usefulness of the paper and bring it closer to the real problems of SMEs.
The literature has been supplemented with representative papers and contributions, mathematical analyzes are well suited and balanced in the context of the paper, and the Conclusions section (including limitations of the study and possible further research directions) is suggestive and well balanced.
In conclusion, this new version addresses all my comments in the previous review.
