Economic Innovation Caused by Digital Transformation and Impact on Social Systems

Round 1

Reviewer 1 Report

The article discusses, based on literature, the co-evolution of digital transformation and economic innovation. The article is well written, well structured, and provides a comprehensive analysis of the history of economic innovation. However, I found it a bit frustrating in that it does not really answer the key question in the abstract, i.e., “why innovation by digital transformation has been faster than any other innovations in the past”. This may be due to a number of issues, as listed below, though probably not comprehensive: (i) the article seems to address only the consumer market, short-circuiting military & nation sovereign industries; (ii) the article does not address the innovation funding, in particular the role of the stock exchange and / or financial markets; (iii) the article does not address the pace of State regulation and taxation, and the role these can have in hindering or giving free rein to innovation; (iv) the article does not address the relocation of jobs due to the change of nature of the work…

I have some concerns with respect to the following statements

• In §3.3.1: “This may lead to less demand for low-skilled labor due to discrepancies between workers' competencies and automation technologies, whereas demand for high-skilled labor grows…” IMHO this is not specific to DT. Moreover, it may also not be true in the long run, as it can already be seen that some high-skilled labour is being replaced by AI.
• In §4.1, there seem to be some confusion between consumer rights and prosumerization. Maybe some clarification needed here.
• In §4.2: “Network activities are not only open and transparent…”. I am not sure what you mean here, considering that a lot of contributions are anonymous.

It would be nice to have a little more on the teaser: “…we plan to give a more concrete shape to this study through a follow-up experimental study…”, especially considering the experimental nature of the study.

Minor comments:

• Abstract: I find the “should” misleading in that it is not a recommendation but a fact: “The purpose of this study is to discuss, based on analysis results, how economic innovation and social systems are connected together and how technology, economic, social, and policy sectors should coevolve (are coevolving) within the enormous framework of social systems, rather than grow (growing) independently.”
• Introduction: It would be better to talk of previous studies in the past tense: “The previous study offers (offered) a new definition of the concept of economic innovation capitalizing on changes in the technological environment. However, it does (did) not include discussions…”
• 2.1.1 – I would be nice to have some dates here, similar to what was done in the following sections.
• Make consistent use of tenses in §3.1: “Sections 2 and 3 will build (future?) on the foregoing discussions to explore the impact of digital transformation on the economic sector. Based on the results discussed here, Chapter 4 identifies (present?)…”
• 3.2.1: “and our analysis are (is) as follows”
• 3.2.1: why is all this section written in the future? It seems to me to relate to facts. “First, the industrial structure will be changed (changes or has changed)…” There are 4 or 5 more similar occurrences in this section, and many more in the last paragraph of §4.3.
• Punctuation issue in §3.2.2: “…consumption sector: (.) First…”
• 3.3 It would be better to talk of previous studies in the past tense: “The preceding section discusses (discussed)…”
• 3.3.2 Suggest rewording “non-competitive” by “monopolistic”
• 4.2 Again an issue on tenses: “First, changes brought about by digital economic innovation in the production sphere will lead (leads / has led)…”
• 4.2 “and the quality of life improved”. Disputable statement: any references here?
• Conclusion - Again an issue on tenses: “The third discussion is (was) about…”
• 4.3 It would be better to talk of previous studies in the past tense: “The preceding sections discuss (discussed)…”

Author Response

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Author Response File: Author Response.docx

Reviewer 2 Report

review attached

Comments for author File: Comments.pdf

Author Response

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Reviewer 3 Report

This is interesting research. The article is well presented and it includes a quite comprehensive analysis.

The assumption " innovation by digital transformation has been faster than any other innovations in the past" is arguable. Any reference to support it? Please, justify and include this assumption in the research framework.

Table 1 appears rather simplistic. I was expecting a standard cyclical presentation. 

The analytical framework is well presented and clearly explained.

Table 2. Key drivers, Internal factors and external factors are not well separated in the table.

Author Response

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Reviewer 4 Report

- The abstract is too long. The idea is to clearly and briefly provide the research gap, methodology, main objective, key contributions, and major results.- Please revise the Conclusion in the abstract to avoid overly casual language.Revise your abstract to include methods employed and implications.

Although the paper's main objectives are denoted at the end of Section "Introduction", they are not motivated as the real novel objectives by using more recent, more relevant papers. Gaps are not well-defined and should be further explained. Why do the authors think this topic is novel and interesting? What is the main contribution of the paper to the literature? Authros must establish the connection between digitial transformation and economic innovation.Alos provide a practicle example.

The intro, in its current form, is providing information, but it's scattered. the text can be revised to improve clarity by focusing on the following structure, for, e.g.-
(a) Context and concept, (b) gap (c) need for study/ motivation/ importance, (d) research questions, (e) contributions (f) structure of the manuscript

--More strength is required to literature I think it would be more beneficial if the authors add

some more new recent studies in this manuscript. Clear research should be drawn from

literature review.

-- Literature Review has the chance to be further improved: it seems that the authors have made the retrospection. However, via the review, what issues should be addressed? What is the current specific knowledge gap? What implication can be referred to? The above questions should be answered. Authors need to propose their study

In heading, 2.2. Economic changes caused by digital transformation, here authors must discuss digital tansformation and type of its technologies, and highlight the importance of the artitificial intellignece. For example, I suggest the following article to authors for the manucript improvemn.

- The conclusion is very weak. It should also be an extrapolation of the key findings from the

research and not a summary. So, there should be conclusions around the background theory, data theory/analysis and, key outcomes. The authors should have included the following sub-sections within the conclusion section with more details:

* Implications to theory and practice should be clearly stated;

* Key lessons learnt;

* Limitations of this research;

Author Response

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Author Response File: Author Response.docx

Round 2

Reviewer 2 Report

The manuscript has been revised according to the comments. However, please adjust the style of the references as required by the MDPI template, e.g., line: 23, 117, 126, 309, and other.

Author Response

Thank you for your comments.

To address your concern, we revised the style of the references by the MDPI template. 

Reviewer 4 Report

- I appreciate the novelty of the author's contributions, but still, authors need to grasp deep ideas on developing the research gap in the Introduction. The manuscript concerning the presentation of ideas shows improvement, but there are still some sentence structure mistakes and develop more clear research gap with the support of previous published studies in the domain of your study aim. However, to genuinely contribute with an article that is expected to synthesize previous contributions in the field and point our further research, i deem that the authors need to do some more work, particularly to sharpen the current manuscript. Below mentioned studies will help you to improve your literature review and hypotheses development parts. Follow these studies

Enabling Progress in Developing Economies: A Novel Hybrid Decision-Making Model for Green Technology Planning. Sustainability. 2022; 14(1):258. https://doi.org/10.3390/su14010258

Digital transformation and sustainable oriented innovation: A system transition model for socio-economic scenario analysis." Sustainability 13, no. 21 (2021): 11564.

The last paragraph of the Introduction must be done a summary (resume) of the paper, i.e., a clear idea about what will be studied in the paper. I could not identify this. The last paragraph's purpose in the Introduction section is to summarize the main points, restate the paper's main idea, and show how the paper statements were proven. I think the paper will considerably improve and be a highly cited article.

Results and Conclusions: The approach to data analysis and discussion is adequate. However, the findings cannot be validated because of the issues mentioned in the methodology. Regarding conclusions, they are the most important output of the research. Therefore, it is suggested to explore more the findings. Implications for future research may also be included in the conclusion at the end. This research has article has created a lively discussion on so many issues that were hitherto unheard of and not addressed.

-Check the citations and references (one by one) if there is any missing information. Citations and references must be 100% accurate according to the journal guidelines.

Author Response

Point 1: I appreciate the novelty of the author's contributions, but still, authors need to grasp deep ideas on developing the research gap in the Introduction. The manuscript concerning the presentation of ideas shows improvement, but there are still some sentence structure mistakes and develop more clear research gap with the support of previous published studies in the domain of your study aim. However, to genuinely contribute with an article that is expected to synthesize previous contributions in the field and point our further research, I deem that the authors need to do some more work, particularly to sharpen the current manuscript. Below mentioned studies will help you to improve your literature review and hypotheses development parts. Follow these studies

Enabling Progress in Developing Economies: A Novel Hybrid Decision-Making Model for Green Technology Planning. Sustainability. 2022; 14(1):258. https://doi.org/10.3390/su14010258

Digital transformation and sustainable oriented innovation: A system transition model for socio-economic scenario analysis." Sustainability 13, no. 21 (2021): 11564.

Response 1: We appreciate your encouragement and helpful comments on our work. The comments and suggestions were helpful in improving the quality of our manuscript. We rewrote the research gap in the introduction section. We revised the research gap as follows:

The majority of reviews (e.g., Nelson & Winter, 1982; Lundvall, 2016; Lucas, 1988) on economic innovation, focus on technological innovation and subsequent economic growth and development. A number of recent studies (e.g., Piccinini et al., 2015; Shin et al., 2020; Nambisan etal, 2019; Schwertner, 2017; Chinoracky & Corejova, 2019; Mićić, 2017) also discuss the economic impact of digital transformation and future policy directions. Among them are similar studies (e.g., Bukht & Heeks, 2017; UNCTAD, 2019; Lee et al., 2017; Preindl & Nikolopoulos, 2020; Dalenogare et al., 2018; Schwab, 2017; Shin et al, 2020; Schwertner, 2017) that discuss economic changes and ramifications derived from digital transformation. There have been no discussions about economic innovation and its impact in the literature. Moreover, there is little discussion about the relationship of an impact between economic innovation and social systems. In general, studies exploring the impact of digital transformation on the economic front involve a fragmented analysis focusing on a specific industry or phenomenon. Thus, there has been no discussion from combined perspectives that take into consideration the economic sector as well as society and policies surrounding the economic sector. In this study, we discuss the results of economic innovation driven by technological innovation and the impact of this economic innovation on social systems from a bilateral perspective, rather than from the unilateral perspective of technological and economic innovation.

Point 2: The last paragraph of the Introduction must be done a summary (resume) of the paper, i.e., a clear idea about what will be studied in the paper. I could not identify this. The last paragraph's purpose in the Introduction section is to summarize the main points, restate the paper's main idea, and show how the paper statements were proven. I think the paper will considerably improve and be a highly cited article.

Response 2: Following your comments, we revised the last paragraph of the introduction. The contents are as follows:

In this study, we went through three stages for analysis. In the first stage, we reviewed 66 publications covering technological innovation, economic growth and digital transformation, classifying them into publications before and after the year 2000. It was to explore how the rise of the digital economy has changed the role of technological innovation. In the second stage, we sought to find the accelerators of digital economic innovation based on our reviews of the aforementioned 66 publications. These papers deal mainly with the topics of innovation, economic growth, digitalization, and digital transformation. In the third stage, we reclassified the results of the entire literature review into those before and after 2016 – the year when a keyword called Fourth Industrial Revolution began to emerge – and defined the period from 2000 to 2015 as the early stage of digital economy, and 2016 and beyond as the age of digital transformation. Based on this classification, we explored not only the differences in phenomena but also the economic impact of digital transformation.

This paper is organized as follows: Section 2 seeks to understand how the role of technology – as it continues to evolve – has changed in terms of economic growth by looking into changes in the relationship between technology and economic growth as well as economic changes brought about by digital transformation. Section 3 provides a detailed analysis of changes in digital economic innovation, from the perspective of innovation, based on the Korean and foreign literature put together for analysis. Section 4 discusses the effects that the positive and negative changes of digital economic innovation, as analyzed under Section 4, have on social systems. Lastly, all these results are put together in Section 5 to provide a conclusion and propose this study’s implications.

Point 3: Results and Conclusions: The approach to data analysis and discussion is adequate. However, the findings cannot be validated because of the issues mentioned in the methodology. Regarding conclusions, they are the most important output of the research. Therefore, it is suggested to explore more the findings. Implications for future research may also be included in the conclusion at the end. This research has article has created a lively discussion on so many issues that were hitherto unheard of and not addressed.

Response 3: Following your suggestion, we rewrote the key findings and the implications for future research in the conclusion section. The contents are as follows:

First, it turns out that there is a diversity of drivers for economic innovation, with different drivers prevailing in different times. Before the digital economy, economic growth accelerated through technology- and entrepreneur-driven innovations, whereas in the early stage of digital economy, new product and process innovations took place around infrastructure and knowledge, facilitating economic growth. In the age of digital transformation, networks and platforms are central to innovation through which new industries emerge and consumer roles evolve.

Second, digital transformation has brought fundamental changes in production, consumption and distribution. First of all, the industrial structure has changed, with cross-industrial convergence taking place vigorously and creating new markets. Digital transformation has also led to a shift in the values that consumers pursue as they put sharing and subscribing over owning. Changes in production and consumption have consequently helped create jobs in new fields. On the other hand, changes in distribution are largely associated with negative outcomes. Changes in industrial structure due to digital transformation have manifested in the forms of reduced jobs, increases in unstable jobs, subsequent increases in income inequality, and the increasing market power of monopoly companies. These phenomena cannot be resolved by internal efforts within the economic sector alone, but will have to be improved through interactions between technology and social sectors within the enormous social systems.

Third, the results of digital economic innovation triggered by digital technology have impact not only on the economic sector but also on technology and social sectors. On the technology front, new forms of technology innovation are required to meet the need for cutting down on costs as well as to respond to increasing market power and prosumerization. On the social front, they cause such problems as the deteriorating work environment due to the declining working-age population and work patterns relying heavily on long hours of labor, widening digital divide among social classes, shifting perceptions about sharing among businesses and individuals, and deepening polarization owing to job automation. In order to tackle these issues, we need to have social discussions and reach social consensus. Furthermore, the effects of changes in the economic sector on social systems will be complemented or improved in each sector. And these improvements will be fed back to the economic sector, causing the technological, economic, and social sectors to coevolve.

Based on these three findings, we offer two proposals to help improve future research projects.

First, it is necessary to specifically determine which of the digital economic innovation drivers has played the biggest part in achieving the digital economic innovation that we have today. At the current stage, it is not easy to pinpoint what drivers have led digital economic innovation. Therefore, it is necessary to find the drivers of economic innovation through quantitative analysis methods and expand the scope of research to similar innovation studies in the future.

Second, the impact of economic innovation on social systems should be quantified by factors. Among the quantified factors, positive ones influencing innovation in each sector should be strengthened further, while negative ones should be improved and supplemented. This will help achieve innovation in each area more effectively.

The discussions herein are significant in that they are integrated discussions on connection, utilization, and interaction among technology, economic, social and policy sectors, including technological innovation, economic growth, and the impact of digital transformation, but they have limitations in terms of methodology and analysis. Methodologically, this study adopted the approach of systematic literature review analyzing domestic and foreign literature, policy outlook reports, trend reports, and press releases. As there are not many discussions on connection and interaction between digital technology and economic innovation, we chose this analysis method as preliminary work to understand the trends of research related to digital economic innovation. We are aware, however, that this analysis method is not complete enough to accurately understand the drivers of digital economic innovation and their effects on social systems. Therefore, in order to make up for these limitations, we will employ quantitative methods in our future studies to measure the drivers of digital economic innovation and its ripple effects on social systems including technology, society and policy.

The results of this discussion will broaden our understanding of innovation drivers and the interactions between innovations, and will help corporate and government decision makers take policy decisions that reflect diverse perspectives. Technological innovation and digital transformation as well as the economic change they enabled are already changing much of our lives in economic, social, policy, and cultural areas. These changes are still ongoing. Some of them may or may not improve the current state. Overall, we have learned from this study that innovations in different sectors do not stand alone but coevolve as they have mutual influence on one another.

Point 4: Check the citations and references (one by one) if there is any missing information. Citations and references must be 100% accurate according to the journal guidelines.

Response 4: To address your concern, we double checked the citations and references.

Author Response File: Author Response.docx

Round 3

Reviewer 4 Report

The authors have responded to all comments of the editors in a suitable manner. As a result, the manuscript has improved enormously. Nevertheless, some further work is needed in order to make the text easier to follow by the readers.
Please follow the journal author instructions. It would be useful for the reader to follow it. In general, the paper needs better organization.

Author Response

We appreciate your encouragement and helpful comments on our work. The comments and suggestions were helpful in improving the quality of our manuscript.

You gave us the 1st and 2nd comments, but the response was insufficient because we had to accommodate different comments of other reviewers at the same time. So, this time, we focused on your opinion and revised it.

We tried to develop the deficiencies of this paper following your comments as much as possible. In addition to specific revisions according to your comments, there were no overlapping parts, and the logic was supplemented to develop smoothly. Despite our efforts to develop and revise, some of your opinions may not have been clearly reflected. We will try to further organize and develop this part through the next study.

We appreciate your generous comments for the qualitative development of the thesis again.

Please check the attached file for specific modifications.

Author Response File: Author Response.docx