Does the Improvement of the Business Environment Improve the Innovation Efficiency of Enterprises? Evidence from the Listed Companies in China

Round 1

Reviewer 1 Report

The authors have covered a complex topic with an well-covered methodology and results. However, it is not enough to list some of the oversights as limitations as they are rather major. Plenty of articles relate innovation to competitive factors, intrapreneurial competences in the company, culture type, customer demands, etc. Thus, it comes across as rather an oversimplification and major oversight of extant research. I would suggest, rather than having a model for the business environment' which is clearly lacking, rather the authors should narrow the focus to certain areas and not claim to have this wider view. This will need a rewrite of sections on the business environment in general since conclusions drawn when overlooking clearly relevant considerations is problematic, at best. Consider for example, a focus on the impact of finance (and many if not most of the level 2 indicators are more financially focussed). This change may lead to a reduction in the methodology and findings sections, which will dedicate more room for discussion of the findings relating to the literature and the implications of these findings. 

Moreover, whilst the source of data is given, there also needs some specification of the sample itself. Please consider giving more info on the sample, as it aids the reader in understanding the context and the significance of the findings. 

Author Response

Dear Editor and reviewer.

We want to thank you for your efforts in reviewing our manuscript titled" Does the improvement of the business environment improve the innovation efficiency of enterprises? Evidence from the listed companies in China "(No: sustainability-2478088) and for providing many helpful comments and suggestions, which will all prove invaluable in the revision and improvement of our paper, as well as in guiding our research in the future.

We have studied your comments point by point and revised the manuscript accordingly. The amendments are highlighted in red in the revised manuscript. All authors have approved the response letter and the revised version of the manuscript.

Thanks again!

We really appreciate you for your carefulness and conscientiousness. Your suggestions are really valuable and helpful for revising and improving our paper. According to your suggestions, we have made the following revisions on this manuscript:

Q1: The authors have covered a complex topic with an well-covered methodology and results. However, it is not enough to list some of the oversights as limitations as they are rather major. Plenty of articles relate innovation to competitive factors, competences in the company, culture type, customer demands, etc. Thus, it comes across as rather an oversimplification and major oversight of extant research. I would suggest, rather than having a model for the business environment' which is clearly lacking, rather the authors should narrow the focus to certain areas and not claim to have this wider view. This will need a rewrite of sections on the business environment in general since conclusions drawn when overlooking clearly relevant considerations is problematic, at best. Consider for example, a focus on the impact of finance (and many if not most of the level 2 indicators are more financially focused). This change may lead to a reduction in the methodology and findings sections, which will dedicate more room for discussion of the findings relating to the literature and the implications of these findings.

Response: Thank you for your professional advice. Your suggestion to narrow the focus to specific areas and avoid broader perspectives is precious. When selecting indicators, we consulted a large number of literature, among which the most internationally influential is the World Bank's "Business Environment Report" (Zhenwei et al., 2021). However, it is mainly used for evaluating and comparing business environments between countries. In order to obtain an authoritative evaluation system, most scholars will select indicators and methods based on the World Bank and in combination with their research focus at the level of research objects (Hui&Shujing, 2022; Tongtong&Fangyi, 2022). We draw on the indicator system of the research group of "China's urban business environment evaluation research" from the perspective of Ecological systems theory through the government environment, human resources, economic environment, and public facilities. Constructing a comprehensive evaluation index system for the business environment from the six levels of the market environment and innovation environment enhances the credibility of empirical results. Although we also want to be detailed in specific industries, considering data availability, we currently need more accurate data sources and complete data, making it impossible for us to conduct a systematic evaluation and analysis. In future research, we will also delve deeper and establish a complete database to discuss from a specific industry perspective, hoping to obtain more accurate conclusions.

Q2: Whilst the source of data is given, there also needs some specification of the sample itself. Please consider giving more info on the sample, as it aids the reader in understanding the context and the significance of the findings.

Response: Thank you for your professional advice. While providing data sources, we further improved our interpretation of the sample itself (L442-452). We also provided a detailed explanation of the innovation of the indicators (L745-L757). The specific situation is as follows:

In terms of indicator selection, the selection of business environment indicators only stays in a particular environment of the business environment (Zhenwei et al., 2021) or directly uses market-oriented indices to measure business (Zhiyuan&Zenglian, 2022), lacking representativeness. The selection of innovation level indicators focuses on enterprise innovation in specific industries (Subhashish, 2022) or innovation in specific economies (Xiaoyang et al., 2022), and the research period is relatively short, controlled within three years (Nannan et al., 2023; Xiaoyang et al., 2022). The innovative selection indicators in this article are based on the indicator system of the "China Urban Business Environment Assessment Research" research group, selecting micro-enterprise data of Chinese listed companies, By using the entropy method to construct a comprehensive business environment index for enterprises, the research on innovation is implemented at the micro level of enterprises, and the scope of enterprises is expanded to make the data more representative. The research period is defined as 2013-2017, with a longer time. The optimization of the business environment has a more significant effect on enterprise innovation. Considering data availability for micro-enterprises, this article cannot provide more information about the samples. However, in future research, we will further improve the database and hope to obtain more accurate conclusions to help readers understand the background and significance of the research results.

 

We tried our best to improve the manuscript and made some changes marked in red in the revised paper, which will not influence the content and framework of the article. We earnestly appreciate the editor' and reviewer' warm work and hope the correction will be approved. Once again, thank you very much for your comments and suggestions.

Thank you and best regards.

Yours sincerely,

Corresponding author Name: Cheng Pan

E-mail: [email protected]

Author Response File: Author Response.docx

Reviewer 2 Report

 

The topic of the article is interesting. However, the overall coherence of the text as well as the research conclusions are questionable. In addition, there are a number of stylistic errors throughout the article.

 

General remarks

 

1.    The note is about causality. In his work, the author very often uses the term "impact" when he uses only regression-type methodology. The correct solution is to use methods based on the concepts of impact effects. The use of panel econometrics methods is a good substitute choice in the absence of counterfactual analyses. It is best to use the terms "relationship", "relationship", "association".

2.    The note concerns the statistical significance of variables in regression models, to which the author attaches great importance and (also) on their basis verifies his hypotheses. In empirical studies, it often happens that statistical significance is not that important. I don't think it's defective. The thing fits into the current debate of scientists from various fields (excessive faith in p-value).

3. The introduction is poorly written and it does not properly refer to previously published studies. The authors need to carefully review the
published literature, identify the gaps in the literature, and propose their approach to fill the gap.
4. A flowchart should be added to the article to show the research methodology.

5. It is suggested to present some new of the results of the study .
6. Much more explanations and interpretations must be added for the result, which are not enough at all. It is suggested to compare the results of the present study with previous studies and analyze their results completely.

7. Conclusion. Kindly frame it along the following lines:
i. Main findings of the present study
ii. Comparison with other studies
iii. Implication and explanation of findings
iv. Strengths and limitations
v. Conclusion, recommendation, and future direction.

 

 

The authors should ask the help of native English speaking proof reader, because there are some typo and linguistic mistakes that should be fixed.

Author Response

Dear Editor and reviewer.

We want to thank you for your efforts in reviewing our manuscript titled" Does the improvement of the business environment improve the innovation efficiency of enterprises? Evidence from the listed companies in China "(No: 2478088) and for providing many helpful comments and suggestions, which will all prove invaluable in the revision and improvement of our paper, as well as in guiding our research in the future.

We have studied your comments point by point and revised the manuscript accordingly. The amendments are highlighted in red in the revised manuscript. All authors have approved the response letter and the revised version of the manuscript.

Thanks again!

We really appreciate you for your carefulness and conscientiousness. Your suggestions are really valuable and helpful for revising and improving our paper. According to your suggestions, we have made the following revisions on this manuscript:

Q1: The note is about causality. In his work, the author very often uses the term "impact" when he uses only regression-type methodology. The correct solution is to use methods based on the concepts of impact effects. The use of panel econometrics methods is a good substitute choice in the absence of counterfactual analyses. It is best to use the terms "relation", "relationship", " association ".

Response: Thanks for your professional suggestion. We have made modifications to the entire text. In the text, we avoid using the term 'impact.' Instead, we use the terms' relationship ',' connection, 'and' association 'based on impact effects.

Q2: The note concerns the statistical significance of variables in regression models, to which the author attaches great importance and (also) on their basis verifies his hypotheses. In empirical studies, it often happens that statistical significance is not that important. I don't think it's defective. The thing fits into the current debate of scientists from various fields (excessive faith in p-value).

Response: Thank you for your professional advice. Based on Microeconomics model frameworks such as resource Signalling theory and Schumpeter innovation theory, this paper uses the Mesomeric effect model to conduct empirical analysis. It constructs a theoretical model of the business environment affecting enterprise innovation capability, further revealing the internal mechanism of the business environment improving enterprise innovation efficiency. First of all, from the perspective of Ecological systems theory, a comprehensive business environment evaluation index system is constructed through six levels of government environment, human resources, economic environment, public facilities, market environment, and innovation environment. Secondly, build Instrumental variables estimation of the business environment to solve the potential endogeneity problem, use various methods to conduct robustness tests, and enhance the credibility of empirical results. Finally, considering the heterogeneity of enterprises in terms of property rights, business scope, scale, etc., this article explores the differentiation of the impact of the business environment on the innovation capabilities of different enterprises through grouping regression. Throughout the entire research process, this article mainly draws on the research method of Xiaoyang et al. (2022), and the significance of the discriminant results primarily depends on the social value of the coefficients and the size of the P-value. In future research, we strive to consider the current debates among scientists in various fields.

Q3: The introduction is poorly written and it does not properly refer to previously published studies. The authors need to carefully review the published literature, identify the gaps in the literature, and propose their approach to fill the gap.

Response: Thanks for your professional suggestion. Following your suggestion, we have carefully rewritten the introduction, referring to previously published research, striving to identify gaps in the literature and proposing methods to fill them. (L28-101)

Q4: A flowchart should be added to the article to show the research methodology.

Response: Thanks for your professional suggestion. We have re optimized the flowchart in the article to demonstrate the research methods (L351). The specific situation is as follows:

Q5: It is suggested to present some new of the results of the study.

Response: Thank you for your professional advice. We present some new results of the study (L828-857). We have supplemented the conclusion: The specific situation is as follows:

There is a significant positive correlation between the business environment and the innovation ability of enterprises. The business environment is an essential soft power for a region or country. A good business environment can create a more fair market, facilitate the flexibility of enterprise operations, and promote technological innovation for enterprises. Secondly, the mechanism analysis shows that optimizing the business environment can improve the innovation efficiency of enterprises by increasing government subsidies and enhancing enterprises' Assumption of risk ability while reducing supply chain concentration and financing constraints can strengthen the promotion of the business environment on enterprises' innovation ability. Finally, heterogeneity analysis indicates that with the increase in market competition, the business environment is more conducive to stimulating the enthusiasm and motivation of state-owned enterprises for technological innovation to maintain a dominant position. A good business environment has a more significant impact on large-scale than small-scale enterprises. The development of the business environment between industries is imbalanced, and the business environment of the manufacturing industry needs to be further optimized to provide an inexhaustible impetus for local enterprises' technological innovation. The research in this article has theoretical significance and practical value: firstly, a comprehensive evaluation of the business environment has been conducted, providing a new perspective for optimizing the business environment. The second is to study the business environment paths that affect enterprise innovation from a micro enterprise perspective, which enriches existing research and has certain theoretical significance. Thirdly, in the context of sustainable development, research has strong temporal significance for achieving sustainable development of enterprises.

Considering the availability of data and the limitations of methods, we need help to come up with a completely new conclusion. In future research, we will try to conduct in-depth discussions to obtain new findings.

Q6: Much more explanations and interpretations must be added for the result, which are not enough at all. It is suggested to compare the results of the present study with previous studies and analyze their results completely.

Response: Thank you for your professional advice. We have added more explanations to the results, compared the results of this study with previous studies, and conducted a comprehensive analysis of their results (L734-825). The specific situation is as follows:

In terms of indicator selection: Most existing research focuses on enterprise innovation in specific industries (Subhashish, 2022) or innovation in specific economies (Xiaoyang et al., 2022), and the research period is relatively short, controlled within three years (Nannan et al., 2023; Xiaoyang et al., 2022). The innovative selection of indicators in this article, on the one hand, implements research on innovation at the micro level of enterprises and expands the scope of enterprises to make the data more representative; On the other hand, the research period will be determined as 2013-2017, with a more extended period, and the optimization of the business environment will have a more significant effect on enterprise innovation. The research results indicate that the essence of business environment participation in promoting the efficiency of enterprise entrepreneurship is to promote the coordination and progress of various environmental aspects, optimize the complex socio-economic system, and thus improve innovation efficiency. In the comprehensive evaluation index system, public facilities and the economic environment significantly impact enterprise efficiency.

Regarding mechanism analysis, Zhiyuan and Zenglian (2022) and Nannan et al. (2023) focused on mediating effects and heterogeneity analysis. Compared with the former, this paper explores the impact mechanism of the business environment on enterprise innovation, innovatively proposes a moderating effect between the two, further improves the analysis mechanism, and enriches the existing literature. Financing constraints and supply chain concentration negatively regulate the business environment's impact on enterprises' innovation ability. After reducing financing constraints, optimizing the business environment can increase financing probability, reduce capital costs, and help promote product innovation for enterprises. Similarly, reducing supply chain concentration can prevent enterprises' profits from being obtained by customers and manufacturers with strong Bargaining power and concentrated geographical location, and enterprises can obtain more innovation resources from a good business environment, thus improving innovation enthusiasm.

In terms of heterogeneity analysis, compared to Nannan et al. (2023) and Ce et al. (2022), which focused on grouping heterogeneity at the macro level, this article innovatively implemented all heterogeneity grouping studies at the micro level of the enterprise, making the research results more representative at the micro level. Specifically, the business environment's impact on enterprises' innovation efficiency varies depending on their property rights, business scope, and scale. Firstly, improving the business environment has the greatest impact on state-owned enterprises. Against the backdrop of transparent markets and alleviating ownership discrimination brought about by optimizing the business environment, state-owned enterprises have a stronger willingness to improve their innovation capabilities in order to maintain their monopoly position. Secondly, optimizing the business environment has a greater impact on manufacturing enterprises than service enterprises. The possible reason is that manufacturing enterprises have a stronger dependence on the environment, and with sound policy support, the willingness to engage in innovative research and development is stronger. Finally, improving the business environment has the greatest impact on large-scale enterprises. Large-scale enterprises are more likely to receive the "dividends" brought by optimizing the business environment than small and medium-sized enterprises. The stronger their ability to bear risks, the greater the possibility of utilizing resources for scientific research and innovation.

Q7: Conclusion. Kindly frame it along the following lines:

1. Main findings of the present study
2. Comparison with other studies
3. Implication and explanation of findings
4. Strengths and limitations
5. Conclusion, recommendation, and future direction.

Response: Thank you for your professional advice. Following your suggestion, we have carefully revised the discussion and conclusions and reorganized them according to the framework. Moreover, it added some limitations, future research directions, and policy recommendations (L826-898). The specific situation is as follows:

We pointed out the main conclusions of the study. There is a significant positive correlation between the business environment and the innovation ability of enterprises. The business environment is an essential soft power for a region or country. A good business environment can create a fairer market, promote flexibility in enterprise operations, and promote technological innovation. The mechanism analysis shows that optimizing the business environment can improve the innovation efficiency of enterprises by increasing government subsidies and enhancing enterprises' Assumption of risk ability while reducing supply chain concentration and financing constraints can strengthen the promotion of business environment on enterprises' innovation ability. Finally, heterogeneity analysis indicates that with the intensification of market competition, the business environment is more conducive to stimulating the enthusiasm and motivation of state-owned enterprises for technological innovation to maintain a dominant position. A good business environment has a more significant impact on large enterprises than on small enterprises. The development of the business environment between industries needs to be more balanced, and the manufacturing business environment needs to be further optimized to provide an inexhaustible driving force for local enterprises' technological innovation.

This study has particular theoretical significance and practical value compared with other literature. Firstly, it comprehensively evaluated the business environment, providing a new perspective for optimizing it. The second is to study the business environment path that affects enterprise innovation from a micro-enterprise perspective, which enriches existing research and has specific theoretical significance. Thirdly, in the context of sustainable development, research has vital contemporary relevance for achieving sustainable development of enterprises.

Next, we propose relevant policy recommendations: firstly, optimizing the business environment can promote the improvement of enterprises' innovation capabilities. The government can allocate resources by streamlining administration, delegating power, and the market. This reduces government corruption and rent-seeking behavior, allows enterprises more time to engage in production activities (Nam et al., 2021), and can attract talent. Funds and projects are concentrated in cities (Mia et al., 2020). Secondly, considering the Mesomeric effect between the business environment and enterprise innovation capability, the government can further improve the infrastructure environment and market environment, attract more external investment (Hua et al., 2022) to broaden the channels for enterprises to obtain funds, ease their financing constraints, reduce the tax burden and credit costs (Otto et al., 2022), and have more idle capital for enterprise innovation to improve innovation efficiency. At the same time, it provides more convenient government service policy guarantees, reduces institutional costs (Jiang et al., 2022), further enhances the risk tolerance of enterprises, and enables them to carry out technological innovation in a stable operating environment. Finally, government regulatory authorities should carry out business environment optimization work tailored to local conditions, significantly increasing efforts to optimize the business environment in areas where state-owned enterprises, large enterprises, and manufacturing enterprises are located. Promote comprehensive and sustainable development of enterprises, thereby better driving the sustainable development of the regional economy.

Finally, this article points out the existing limitations and proposes prospects for future research: firstly, due to the limited abilities of scholars and a lack of data, the selection of business environment indicators could be better. Some objective factors can still affect the business environment, such as the degree of transparency of judicial information and satisfaction with social security. The measurement of variables will impact research results and provide space for future research. Secondly, this article only covers Chinese enterprises and does not involve foreign enterprises. The impact of the business environment in other countries on the innovation ability of enterprises, as well as the comparison of this impact between countries at different levels of development, is also a topic worth studying. Therefore, future research will further continue and enrich the evaluation of the business environment, enabling it to measure the urban business environment more comprehensively and accurately, thus obtaining more accurate conclusions.

We tried our best to improve the manuscript and made some changes marked in red in the revised paper, which will not influence the content and framework of the article. We earnestly appreciate the editor' and reviewer' warm work and hope the correction will be approved. Once again, thank you very much for your comments and suggestions.

Thank you and best regards.

Yours sincerely,

Corresponding author Name: Cheng Pan

E-mail: [email protected]

 

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

Thank you for all the changes made

Have proofread by a native English speaker, if not done so already, just to check for any minor typos.