Dynamic Influences of FDI and R&D Expenditures on IT Business Value: An Empirical Test from China

Round 1

Reviewer 1 Report

The manuscript and its problems are very interesting. I congratulate the Authors on their research idea. I understand that the Chinese economy is of utmost importance to the Authors. However, I think comparative studies with other economies would be useful. I have some comments and questions below (see attachment).

Comments for author File: Comments.pdf

Author Response

 The author's notes to reviewer is in the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

1. Explore and explain more on the productivity paradox for China especially during the sample period selected.

2. Provide the contribution of this study to the body of knowledge.

3.  Why adopt the partial adjustment model that was originally developed by Nerlove in 1958? How would this model still be relevant in explaining the productivity paradox? Additionally, the cited paper by Lin et al (2010) adopted to 12 countries with a further comparison between them. 

4. The fitting degrees of these models all exceed 0.7, thereby 272 indicating their good explanatory power. How was this determined?

5. Perhaps there is the possibility of the sampling period that directed the results towards the productivity paradox as been claimed by the authors. Also, the national factors considered here perhaps do not have the direct link on the IT business value.

Author Response

See in the attachment, please.

Author Response File: Author Response.pdf

Reviewer 3 Report

The paper examines the dynamic influences of FDI and R&D expenditure on IT business value. Structure of the paper is clear and logical. Methodology and data are described clearly as well as the results. Authors discussed their results and gave consluions based on their research.

Author Response

Thanks for the reviewer's high recognition of this research, which will be the motivation for me to continue to revise this research. Based on the original version, this manuscript further adds the following content:

1.Explore and explain more on the productivity paradox for China especially during the sample period selected in the Discuss part of this paper.

2.Provide the contribution of this study to the body of knowledge in the Introduction part of this paper.

3.In the result analysis part, the logic is further straightened out, thereby enhancing the interpretation of results.

4.The language of the full article has been refined to improve the readability.

5.The formulas, especially the parameters in the research are further explained.

Reviewer 4 Report

Thank you for the chance to review this paper. This ambitious paper claims to look at 3 questions (at least). 1) has China's IT affected growth? 2) such an effect has occured at a transition speed that we can measure, and 3) R&D or FDI can replace the IT sector's affect. The authors conduct simple OLS studies to look at these 3 areas.

I am a Harvard trained PhD economist and work at an ivy league university (when not consulting for the UN) and live in China. I have reviewed easily over 200 papers like this in my career. So I feel qualified to review this paper.

To start with the good parts, I really liked the framing of the question in terms of the "productivity paradox". Personally, I would have titled the paper something like Did China Suffer from a Productivity Paradox in the Early 2000?

I mention this because the tone of the paper is gray. Gray, gray, dull. Why is your research original? Why isnt it just a China-flavored IT imacts on GDP paper? I rated the paper low on originality and scholarship because you dont really sell what is new and exciting about your paper. I think your study might be exciting. But I couldnt tell (see below).

I had a difficult time reading and understanding this paper because of the writing. At a minimum the whole paper needs to be written more clearly. I suggest you have a non-economist family member read it and highlight sentences they don't understand. If they don't understand -- your other readers won't understand. I list some of the many points...

1. What is Z? What is W? In eq. 2?

2. Is alpha the same as the usual Cobb-Douglas?

3. Why do you discuss delta when you dont use it in the model?

4. Why discuss optimal betas, which you also don't use in the model?

5. PV is simply Y(t)? Is that right?

6. Why do you mention PM? You just mention it, then forget it.

7. If that's true, PR is upside down. The change in Y over Y is some kind of performance (I ASSUME PR is short for 'PeRformance')?

8. APR and APV (Im not sure what the difference is) are scalars (ie not a time series). Again, they never appear again.

9. I need to know at W is to assess if your models are good or not.

10. Why do you need 8 models? Why not just go to 8? I think because you just plop 8 equations all together without any explanation or description of the diffferences between them, its easy to get confused.

11. why does the adj. factor in eq. 11 have pi(0) and pi(1)? Why include last period's TFP and plus this year's multiplied by this year's FDI and next year's TFP multiplied by R&D? 

12.  If pi is delta, why did you waste my time describing pi?

13. What is C (in Table 1)?

14. Is I investment? Ie change in gross fixed capital?

15. FDI and R&D not appear in your model anywhere. So why did you waste my time presenting equations 1-3? And 4-11??

16. sec 3.3. You present the regression variables as numbers, but the results as letters. That is why I dont know what C, I etc are.

17. IT expenditure is not the same as expenditure in the IT sector? Is it? Or is it IT spending across the economy?

18. What is the BASE of human capital you are subtracting IT costs from? Like value of education up to tertiary education?

19. What does " internal expenditure of national R&D development" mean? I think the translation into English misfired.

20. Why do you use data on GNP if you talk about GDP everywhere else (line 263)?

That's it. I won't read further. I cant guess if your econometric work is good or not if I dont know what you are regressing. For example, I cant read Table 2 because I dont know what PR and PV are. Is f(X,beta) from the regression results? Where does it come from? Is delta Y change in GDP? If so, why is it different than those in the national statistics?

Also please make you everything in your regression is differenced. Otherwise, you have a unit-root problem. I'm not sure what your D-W statistic measures. But if it measures change of your dependent var. over the years covered, the unit-root (AR(1) problem may explain the low DW and high R2. You have suspiciously high R2. I would like to know what the residuals look like.

Also, your literature review is hurried and inadequate. Please reduce the number of people you cite. And discuss them in more depth. I am tired of seeing citations/referencs used to decorate sentences, rather than understand the literature.

Dont just change a few references. I want to see about half the literature cited. There is no reason to have sentences like "IT business value can be influenced by many factors from the microscopic level, including related and unrelated diversification degrees, growth options, vertical integration [20], enterprise scale [21], organizational factors [22], CEO’ Perceptions [23], and Strategic Alignment [24]..." (lines 123-125).

So that it. I will probably need 2 more rounds to say definitely if this paper is publishable. If you agree to change the above, the next round will look at the empirics and the interpretation.

Please have a family member or friend outside your area read over the paper before you resubmit. Simply saying the translator did his job well doesnt mean the writing is understandable.

Looking forward to seeing your revisions.

 

Author Response

The author's notes to reviewer is in the attachment, please.

Author Response File: Author Response.pdf