The Impact of R&D and Non-R&D Subsidies on Technological Innovation in Chinese Electric Vehicle Enterprises
Round 1
Reviewer 1 Report
Comments and Suggestions for Authors
This is a well-written paper that addresses an important issue is of strong interest to the readers of the journal.
The paper has one major shortcoming that needs to be address effectively. The other suggestions below are designed to improve the paper.
Major shortcoming
The basic finding of the paper is that R&D subsidies to a firm, received at time period t, influence patent activity in time period t+1. The authors infer that the causation flows from the subsidy to the patent activity. An alternative interpretation of the observed correlation is that government officials allocate subsidies in time period t to firms that they expect to be innovative in time period t+1. This will make the government officials look good and ensure that innovative firms are subsidized. (Notice: if the government subsidies were randomly assigned to firms, the causal reasoning of the authors would be valid; of course, there is no reason to believe subsidies are randomly allocated to firms). The proper solution to this endogeneity problem is to build a complementary model of the government's subsidy-allocation process. A simultaneous-equations model is then estimated.
The authors mention this issue only briefly -- and in passing -- on p. 6, line 296, but -- as I explain above -- the endogeneity issue is not mitigated or solved.
Other suggestions
1. The motives for the Chinese EV subsidy program were not primarily environmental in nature. They related to the need to reduce China's oil insecurity (imports) and to create a globally competitive auto industry (Chinese planners were frustrated that Chinese firms could not compete globally in the market for gasoline and diesel power vehicles). See John D. Graham. The Global Rise of the Modern Plug-In Electric Vehicle: Public Policy, Innovation, and Strategy. Elgar Publishing, UK, 2021.
2. Other government policies that helped China's EV producers should be mentioned. They included restrictions on the use of gasoline powered cars in the large Eastern cities, the national ZEV mandates, and the subsidies of public charging networks.
3. The midstream producers (e.g. CATL) were aided when the central government required China's EV producers to use China's battery suppliers or lose government subsidies for EV production. This effectively froze out Korean and Japanese battery suppliers for a period of time. This is worth of mention.
4. The EV producer subsidies were originally scheduled to phase out in 2020 as the national ZEV program began. The subsidies were then extended at a reduced level to 2022 during the pandemic. The authors should note this history and fact check whether subsidies ended completely in 2022.
5. Please clarify whether definition of EVs includes PHEVs.
6. How large are the positive R&D externalities in the auto sector? Reference 9 does not provide this evidence.
7. The authors might also note that the structure of the subsidies excluded HEVs (except at the very beginning), which can be interpreted as a way to favor Chinese automakers over Toyota, as Toyota was deeply invested in HEVs.
8. The authors might also mention that some local governments subsidized their host EV manufacturers by providing free or reduced price land for production facilities.
9. Please explain how an R&D subsidy is distinguished from a non-R&D subsidy. I assume that the vehicle production subsidies for EVs are classified as non-R&D even though their purpose is to stimulate development of the EV industry.
10. The authors should seek to isolate the impact of subsidies on startup EV manufacturers as opposed to traditional EV manufacturers. The impact on state-owned auto makers might also be worthy of analysis.
11. Downstream producers are not necessarily immature. Example: nickel miners and processors.
12. Upstream enterprises may be startups such as NIO and Xpeng.
13. Are subsidies to upstream enterprises shared (informally through price arrangements) with suppliers?
14. Since revenue from R&D subsidies and non-R&D subsidies are fungible with other sources of revenue inside the firm, why does it matter whether the subsidies are designated R&D or non-R&D?
Author Response
Please see the attachment
Author Response File: 
Author Response.pdf
Reviewer 2 Report
Comments and Suggestions for Authors
This Study differentiates between R&D and non-R&D subsidies and uses data from listed companies and New Third Board companies in China from 2013 to 2022 to empirically analyze the effects of these two types of subsidies on the innovation of EV enterprises from the perspectives of innovation strategy and the industrial chain. The paper is interesting and relevant; however, it has several weaknesses that need addressing.
1. In the Abstract section, the originality should clearly emphasize this paper's contributions to the body of knowledge
2. Research Question: The research question needs to be clearly presented in the introduction. This will help readers understand the purpose of your study and its relevance in the field. Research Gaps: It is crucial to highlight the research gaps that your study aims to fill. This will not only justify the need for your research but also position your work within the existing body of knowledge.
3. Is the paper's argument built on an appropriate base of theory, concepts, or other ideas? Has the research or equivalent intellectual work on which the paper is based been well designed? Are the methods employed appropriate? The methodology section should be more detailed, and the authors should also well-explain the organization of their method.
4. The discussion section should provide deeper insights into your findings, citing the relevant sources from existing literature.
5. Conclusions should be re-written based on the findings of the survey removing claims that are not supported by the data presented in the paper. Also, they should be continous instead of bullet points. Highlight key insights, address potential limitations of the study, and explore the broader implications of your results.
Author Response
Please see the attachment
Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
Comments and Suggestions for Authorsi am satisfied with how the reviewers addressed my comments.
