The Innovation Plight and Operational Efficiency of Chinese Manufacturing Enterprises: From the Perspective of Risk Tolerance, Expectation, and Profitability
Round 1
Reviewer 1 Report
Comments and Suggestions for AuthorsOverall an interesting and compelling study on which the authors proved their mastery in using statistical methods. The literature review part needs to be considerably improved adding more sources to support the hypotheses. In the same time, the authors need to add more clarifications in the point 4 of their study (Results) about each of their hypothesis why is it confirmed or not and make comparisons with other previous studies which researched the same things and see if the corroborate those or they found something new.
Author Response
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Reviewer 2 Report
Comments and Suggestions for AuthorsThe present paper analyses variation in the return of assets across a sample of Chinese manufacturing firms as a function of a gap between real and predicted innovation activity, which the authors refer to as an "innovation dilemma". Using a panel regression, they find that the outcome variable is negatively impacted by the degree of "innovation dilemma" measured in the previous year.
I quite like the research question and find the data and approach interesting. To get the paper to a publishable standard, there are a few issues that must be improved as the paper in its current form has several ambiguities and the empirical analysis is insufficiently justified.
I am not convinced that the return on assets is comparable for a large number of different companies. The authors should do more to justify their data. In particular, I would be worried about reported microdata of firms that are not publicly listed and subject to the discipline of the stock market as these firms might not have an incentive to correctly report ROA. Also, I am wondering whether the sample mixes both private and state-owned enterprises and whether ROA data for both of these firms is comparable, as state-owned enterprises might have different reporting incentives or access to cheaper credit, potentially leading to excessive balance sheets.
The measure of "innovation dilemma" is key. I think the expression "dilemma" is unfortunate because we are not looking at a dilemma, that is, a hard choice between two alternatives, but a measure of inefficiency: the gap between real and predicted innovation. Innovation is hard to measure and even harder to predict, so I have some concerns about a measure that confidently uses both. Real innovation is purely measured from R&D spending. This raises several concerns, e.g., other expenses may be labeled as R&D spending if they qualify for tax credits. Also, R&D spending may simply be more efficient some industries than others. The authors should better justify their prediction of innovation, which is the other component of the "innovation dilemma" variable. The authors need to explain better how they predict firms' innovations, present the results of their prediction, and give readers some intuition about the source of variation.
Currently, the authors assert that this gap is particularly high in "old industrial areas" (p.4) and give some intuition as to why that may be the case. This would be good, if the results were credible. As it is, it could be that the expected level of innovation is simply overly optimistic. Without better explanations about the estimation procedure, the reader cannot evaluate why they should believe these results.
Overall, the material should be restructured. The reader is left wondering what is meant by innovation dilemma until after the introduction. This is too late. The paper needs to make clearer what exactly the research question is, what they are studying and how.
The paper claim that already the base regression identifies the causal effect of the "innovation dilemma variable" (page 10) but then throws in other methods known from microeconometrics, including an instrumental-variables and a difference-in-differences regression or propensity score matching. I am concerned that none of these methods are adapted correctly to a panel environment. Furthermore, for their choice of instrumental variable, the authors do not explain why the instrument is exogenous and has a strong first-stage.
For the difference-in-difference regression, the important parallel trends assumption is not explained or justified. Given that "high-quality development" is not a randomly allocated variable but certainly correlated with both the outcome variable and innovation activity, this analysis is highly problematic.
Propensity-score matching is also problematic as a technique to estimate causal effects if there are unobserved differences between matched firms that drive the results. This will likely be the case for the same reason as for the difference-in-differences regression. I would recommend focusing on the panel regression, avoiding more advanced techniques which the authors are currently using incorrectly, and removing all references to estimating a "causal" effect. Given the broad nature of the study, I would recommend framing it as a correlational study and describing the correlation between returns and innovation activity.
Some abbreviations need further explanation and definition. What are "ST, *ST and PT enterprises" (page 9)? What is "VUCA" (abstract)? The abbreviation "VUCA" is not used again in the paper, so it can be dropped.
Comments on the Quality of English Language
The article suffers from grammatical errors and formulations and syntax that might be confusing to most English-speakers. One ambiguity comes from the use of the word "dilemma". A dilemma according to the Merriam-Webster dictionary is "a situation in which one has to choose between two or more things, ways, or plans that are equally unsatisfactory : a difficult choice". Such a dilemma is indeed described on page 7, when a struggling firm has to choose between cutting R&D spending to reduce costs or expanding R&D spending to improve its future prospects. Unfortunately, this is not at all what is captured in the variable called "innovation dilemma" as explained above. A more suitable expression should be used, e.g. "innovation gap" or "innovation inefficiency" to avoid confusion.
Also, throughout the paper, sometimes the authors write about "the innovation dilemma", which implies that this is about a particular difficult choice, faced by all firms, for example the one mentioned on page 7. Elsewhere, the authors write about "innovation dilemmas" in plural form, which implies that there are several different dilemmas faced by different firms. Which one is it?
Many sentences are excessively long, for example on page 7 "The development ability of an enterprise is an important aspect for investors and the 263 economy and society to evaluate the value of an enterprise, which not only reflects the 264 current development results of an enterprise, but also affects the outside world's expecta- 265 tions of the future development of an enterprise, and thus affects the operating efficiency 266 of an enterprise in the current or even future business period [29]." Some pages, such as page 8, contain almost an entire paragraph. The authors should ruthlessly edit their article to make sure their sentences are simple and clear, and paragraphs contained to a single idea. Otherwise, the paper will lose many readers that would otherwise be interested because its ideas are not presented clearly enough.
I recommend identifying the meaning of each paragraph, starting with a "topic sentence" that tells the reader the most important information contained in the paragraph, and cutting each paragraph down to circa 10 lines at most. Paragraphs that currently contain several ideas should be split. Runaway sentences like the one above should be shortened by removing unnecessary words and focusing on the core meaning. For example, the long sentence above could be shortened to "To evaluate a business, investors care about both the current and expected future innovation ability of an enterprise." There are a lot of unnecessary references, generalizations and hedges that make the paper hard to read. Most sentences would benefit from more focused and clearer writing.
Author Response
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Author Response File: Author Response.pdf
Reviewer 3 Report
Comments and Suggestions for AuthorsThe Innovation Dilemma and Operating Efficiency of Manufacturing Enterprises: Evidence from China
Innovation Dilemma is a very interesting research topic and authors need to focus on more critical thinking instead of single sources.
1. The abstract is more formative and also would benefit from incorporating statistical value to further support the hypothesis.
2. The authors failed to provide more critical thinking regarding the Innovation Dilemma aspects and its impact on operating efficiency. Why impact is negative or not positive. The authors failed to provide more in a deeper critical analysis of the Innovation Dilemma's effects on operational efficiency.
3. It is important to evaluate why the impact is not positive and to challenge previous research and its conclusions. For instance, heightened employee engagement frequently results in the generation of innovative solutions and the ability to launch new products or services swiftly. Therefore, in this scenario, positive outcomes may be observed in both short-term and long-term Innovation Dilemmas. The authors should elaborate on how the Innovation Dilemma impacts operational efficiency in the short or long term.
4. Mechanisms of Action; this subheading doesn’t make sense however needs to make its authentic variable association that is mentioned as mechanics or mention variable.
5. Why are enterprise's operational efficiency just measured from one indicator it is not sufficient for research analysis.
6. The analysis section needs to provide a correlation test and VIF for more clarity. Hence overall analysis section is fine but needs to be explained in more depth.
7. Theoretical contribution and managerial implication section need to be added.
Comments on the Quality of English LanguageModerate editing of English language required
Author Response
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Author Response File: Author Response.pdf
Round 2
Reviewer 3 Report
Comments and Suggestions for AuthorsI am satisfied with the revised version of the manuscript. However, I have no further comments.
Comments on the Quality of English LanguageMinor editing of English language required
