The Role of Business Environment and Digital Government in Mitigating Supply Chain Vulnerability—Evidence from the COVID-19 Shock

Round 1

Reviewer 1 Report

Dear Authors,

Congratulation on the paper. It contributes to the knowledge of digital governing and resilience.

I suggest extending the conclusion parts and writing it in a neutral tone. Instead of proposing to the government what to do, the opportunities and benefits should be emphasized and connected with the evidence from your research. Let the stakeholder decide on the proper actions.

I propose to use synonyms of 'enterprise' in the text and avoid repeating the same word in one sentence (e.g., prompt).

Altogether, the readers need more information about the findings and their relevance. The result part is overwhelmingly math oriented instead of relevance information oriented.

You can revise your submission in a few days and submit an excellent paper.

Good luck,

Author Response

Response to Reviewer 1 Comments

Dear reviewer,

Thank you for your valuable comments. We made corresponding amendments to the paper.

 

Point 1: I suggest extending the conclusion parts and writing it in a neutral tone. Instead of proposing to the government what to do, the opportunities and benefits should be emphasized and connected with the evidence from your research. Let the stakeholder decide on the proper actions.

 

Response 1: We revise the conclusion to make the writing more neutral. We emphasize the benefits of the business environment and digital government rather than telling the government or enterprises what to do. In addition, we add a section on the future research direction at the end of the conclusion.

 

The COVID-19 epidemic has brought many difficulties and challenges to the supply chain of enterprises which largely determines the safety and prosperity of the economy .  Using large-scale enterprise survey data to conduct systematic empirical research, this paper finds that the business environment and digital government can mitigate the negative impact of the COVID-19 epidemic on the enterprise supply chain. The conclusion remains stable after a series of tests, filling the gap in relevant research. In addition, we also propose and verify the mechanism of digital government and business environment to mitigate the epidemic's impact, that is, timely introducing effective mitigation policies and providing better product guarantee. By linking the macro-business environment and digital government with the micro-enterprise supply chain, this paper has essential research significance. From the perspective of enterprises, overcoming the supply chain vulnerability caused by COVID-19 is conducive to forming a competitive advantage. From the perspective of local governments, creating a good business environment contributes to regional economic recovery, forming supply chain advantages, and attracting enterprises to settle in.

Based on the research conclusion, this paper puts forward the following policy recommendations to improve enterprise supply chain stability. First, the positive impact of the business environment and government digitization on the supply chain deserves attention. Developing a good business environment and accelerating digital construction is a potential way to improve the stability of the supply chain and regional economy and to reestablish economic competitiveness for local government in the "post-COVID-19 era". Second, the timely release of relief policies to ensure the stability of production factor supply and logistics can effectively mitigate the epidemic's impact on the enterprise supply chain in the context of the rapid rise of confirmed cases.

This paper provides evidence that the business environment and digital government can benefit enterprises from relieving the Covid-19 shock on supply chain stability . However, the supply chain is only one of the critical elements of enterprise development, while other factors still deserve our more attention in the future research. For example, whether the business environment and digital government can enhance enterprises' resilience to COVID-19 is an issue of practical significance Furthermore, the relation between business environment, digital government and enterprises’ innovation strategy has great research potential.

 

Point 2: I propose to use synonyms of 'enterprise' in the text and avoid repeating the same word in one sentence (e.g., prompt).

 

Response 2: We re-examined the whole article, refined redundant expressions, and replaced some words with synonyms. The repetition of sentences in revised manuscripts decreased significantly. Please refer to the revised paper for more details.

 

Example 1: The survey collects the evaluation of the business environment of the sample enterprises and counts the characteristics and operating conditions of the enterprises.

Revised version: The survey evaluates the business environment, counts the characteristics and operating conditions of the enterprises.

 

Example 2: Through economic analysis, the business environment and digital government may mitigate the vulnerability of enterprise supply chains through the following mechanisms.

Revised version: Through economic analysis, the business environment and digital government may relieve the vulnerability of enterprise supply chains through the following mechanisms.

 

Point 3: Altogether, the readers need more information about the findings and their relevance. The result part is overwhelmingly math oriented instead of relevance information oriented.

 

Response 3: In the part of empirical results, we supplement the economic meaning of the study and strengthen the logical reasoning.

 

The coefficients of logarithmic confirmed cases in columns (1) - (3) of Table 3 are significantly positive, and the coefficient in column (4) is significantly negative. Specifically, when other variables are in the mean value, the probability of the enterprise supply chain facing three, two, and one difficulty increases by 4.04, 11.2, and 19.7 percentage points. Respectively, for every 1% increase in urban confirmed cases, the probability of no supply chain difficulties decreases by 34.9 percentage points. The results imply that the epidemic's shock increases the probability of enterprises facing supply chain difficulties and the vulnerability. The more serious the epidemic is, the more stringent the prevention measures taken by the government, and the more likely the enterprises will face supply chain crisises.

The coefficients of cross-multiplying terms in columns (1) - (3) are significantly negative, and column (4) is positive. When other variables are in the mean value, the probability of the enterprise supply chain facing three, two, and one difficulty decreases by 0.86, 2.38, and 4.2 percentage points. Respectively, when the urban business environment and the logarithm of confirmed cases increased by 1, the probability of no supply chain difficulties increased by 7.44 percentage points. When other variables are in the mean value, the probability of the enterprise supply chain facing three, two, and one difficulty will decrease by 0.12, 0.34, and 0.6 percentage points. Respectively, the probability of the absence of supply chain difficulty will increase by 1.06 percentage points for each increase in the cross multiplier between digital government and the logarithmic of confirmed cases. The results indicate that the business environment and digital government have a mitigating effect on the epidemic's impact, reducing the probability of difficulties in the enterprise supply chain and relieving the supply chain's vulnerability. 

 

Thank you for your valuable help. We hope you appreciate the revised paper and wish you all the best.

 

Author Response File: Author Response.docx

Reviewer 2 Report

1.     The title of the research is long and should be shorten , if possible

2.     The research address three main contributions. The research gaps and contribution  are  clear, focused, and clearly state what the writer needs to do. But the research question should be stated.

3.     The literature review should include short brief about supply chain risk and the impact of COVID19 on supply chains.

4.     The methodology and analysis are well developed, implemented, and explained.

5.     The topic is relevant in the field of supply chain

6.     The conclusions are consistent with the evidence and arguments presented and they address the main objectives posed.

7.     There is no directions for future research. Further elaborations in future research directions in the conclusion section.

8.     Authors should specify the target audience of the study.

9.     In general, it is well organized and the tools used are suitable and efficient.

10.The English language of the paper is good.

Author Response

Response to Reviewer 2 Comments

Dear reviewer,

Thank you for your valuable comments. We made corresponding amendments to the paper.

 

Point 1: The title of the research is long and should be shorten , if possible. 

 

Response 1: Without affecting the article's theme, we change the title to "The Role of Business Environment and Digital Government in Mitigating Supply Chain Vulnerability - Evidence from the COVID-19 Shock".

 

Point 2: The research address three main contributions. The research gaps and contribution  are  clear, focused, and clearly state what the writer needs to do. But the research question should be stated.

 

Response 2: Thank you for your appreciation and suggestions. We added research questions in the introduction.

 

This paper aims to investigate whether the business environment and digital government can mitigate enterprises’ supply chain vulnerability subject to the COVID-19 epidemic's shock. We make a systematic empirical study based on the survey data of nearly 40,000 enterprises of the National Federation of Industry and Commerce in 2020, "10,000 private enterprises evaluating the business environment," to verify this conjecture and fill the gap in the academic circle. Our results show that the business environment and digital government can mitigate the impact of the COVID-19 epidemic and improve the vulnerability of the enterprise supply chain, and this conclusion is robust. Further mechanism analysis implies that the business environment and digital government can speed up the introduction of effective bail-out policies and protect production factors and logistics, thus mitigating the impact of the COVID-19 epidemic and the supply chain's vulnerability. Currently, most countries have abandoned the "Zero COVID-19" strategy. Under the "New Normal" coexisting with COVID-19, strengthening the construction of the business environment and the digital government is crucial to the sustainable development of enterprises.

 

Point 3: The literature review should include short brief about supply chain risk and the impact of COVID19 on supply chains.

 

Response 3: The literature review involves part 2.1 of risk, which is the literature on supply chain risk. Thank you for pointing out that we have further clarified this point in the revised paper.

Different scholars have different definitions of the above concepts. Ho et al. (2015) [7] define supply chain risk as "unexpected macro and micro events that may have adverse effects on any part of the supply chain, thus leading to enterprise failures or violations." Wang and Jie (2020) [8] believe that supply chain uncertainty and risk are closely linked, uncertainty increases the possibility of risk occurrence, and risk is the result of uncertainty.

 

In the literature review, we added COVID-19's impact on the supply chain risk.

2.2 COVID-19 and supply chain

The COVID-19 epidemic is a sudden, unpredictable event  along with various risks in a broad sense. It has affected both ends of the supply chain simultaneously. On the supply side, the epidemic caused labor shortage, transportation disruption, and the corresponding shortage of enterprise output [21]. On the demand side, some industries' demand surged, such as medicine [22] and food [23], while most industries' demand plummeted, such as tourism [24] and transportation [25]. Also, the epidemic's impact has led to a sharp decline in residents' income and an increase in uncertainty. Residents increase savings with less consumption and unnecessary expenditures due to their risk aversion, which may harm the supply chain of relevant industries [26]. The prices and demand for necessary products increase, while the prices and demand for non-necessary products decrease. Overall, the literature on the COVID-19 epidemic and the supply chain vulnerability mainly focuses on case studies and specific industries, while empirical studies  systematically exploring their relation across various industries  are  limited.

 

Point 3: There is no directions for future research. Further elaborations in future research directions in the conclusion section.

 

Response 3: We add a section on the future research direction at the end of the conclusion. Besides, we revise the conclusion to make the writing more neutral.

 

The COVID-19 epidemic has brought many difficulties and challenges to the supply chain of enterprises which largely determines the safety and prosperity of the economy .  Using large-scale enterprise survey data to conduct systematic empirical research, this paper finds that the business environment and digital government can mitigate the negative impact of the COVID-19 epidemic on the enterprise supply chain. The conclusion remains stable after a series of tests, filling the gap in relevant research. In addition, we also propose and verify the mechanism of digital government and business environment to mitigate the epidemic's impact, that is, timely introducing effective mitigation policies and providing better product guarantee. By linking the macro-business environment and digital government with the micro-enterprise supply chain, this paper has essential research significance. From the perspective of enterprises, overcoming the supply chain vulnerability caused by COVID-19 is conducive to forming a competitive advantage. From the perspective of local governments, creating a good business environment contributes to regional economic recovery, forming supply chain advantages, and attracting enterprises to settle in.

Based on the research conclusion, this paper puts forward the following policy recommendations to improve enterprise supply chain stability. First, the positive impact of the business environment and government digitization on the supply chain deserves attention. Developing a good business environment and accelerating digital construction is a potential way to improve the stability of the supply chain and regional economy and to reestablish economic competitiveness for local government in the "post-COVID-19 era". Second, the timely release of relief policies to ensure the stability of production factor supply and logistics can effectively mitigate the epidemic's impact on the enterprise supply chain in the context of the rapid rise of confirmed cases.

This paper provides evidence that the business environment and digital government can benefit enterprises from relieving the Covid-19 shock on supply chain stability . However, the supply chain is only one of the critical elements of enterprise development, while other factors still deserve our more attention in the future research. For example, whether the business environment and digital government can enhance enterprises' resilience to COVID-19 is an issue of practical significance Furthermore, the relation between business environment, digital government and enterprises’ innovation strategy has great research potential.

 

Point 4: Authors should specify the target audience of the study.

 

Response 4: The target audiences of this article are the government and enterprises. In the conclusion section, we explain this paper's significance respectively.

 

From the perspective of enterprises, overcoming the supply chain vulnerability caused by COVID-19 is conducive to forming a competitive advantage. From the perspective of local governments, creating a good business environment contributes to regional economic recovery, forming supply chain advantages, and attracting enterprises to settle in.

 

Thank you for your valuable help. We hope you appreciate the revised paper and wish you all the best.