The Heterogeneous Effects of Central and Local Subsidies on Firms’ Innovation
Round 1
Reviewer 1 Report
THE ARTICLE IS RELEVANT. BUT THERE ARE SERIOUS COMMENTS THAT ARE IMPORTANT TO FULFILL.
1. THE ABSTRACT IS WRITTEN WITH AN ERROR. The relevance of the study, its purpose, objectives, the year of the study, the method used, the complexity of the study, significance, etc. EACH OF THEM SHOULD BE WRITTEN IN ONE SENTENCE.
2. THESE SUGGESTIONS CAN BE INCLUDED IN THE INTRODUCTION. Four decades of rapid economic growth have enabled the Chinese government to dedicate more resources to R&D. China is the world's second largest spender on R&D in terms of absolute expenditures and the largest investor on a purchasing power parity basis.
3. The estimation results of this study have important policy implications. IT SHOULD BE WRITTEN SPECIFICALLY.
4. THESE STATEMENTS CAN BE INCLUDED IN THE ABSTRACT. The objective of this study is to investigate the impact of government subsidies on firms' innovation. Specifically, this study has two objectives. First, this study will test whether government subsidies have a positive impact on firms' innovation in seed companies in China. Second, this study will test whether the impact of local subsidies differs from that of central subsidies.
5. FROM THE INTRODUCTION AND PART 2 (2. China'S agricultural R&D investment and Innovation), 3 parts should be compiled. 1. INTRODUCTION. AND THIS PART IS SMALLER. SHOULD BE SIGNIFICANTLY INCREASED. 2. LITERARY REVIEW (ABSENT). PART 3. (2. China'S agricultural R&D investment and Innovation) IS NOT BAD, BUT IT NEEDS TO BE INCREASED.
6. Empirical models and estimation results He has to separate.
7. 5. Conclusions and discussions. THIS DOESN'T FIT. THIS IS SIMILAR TO THE STATEMENTS GIVEN IN THE ABSTRACT AND INTRODUCTION. THE EXPRESSION MUST BE OBTAINED IN A DIFFERENT WAY. THIS PART DOESN'T QUITE FIT. IT SHOULD BE WRITTEN AGAIN AND WIDELY.
8. References. MUST BE UPDATED. MANY MDPI JOURNALS HAVE ARTICLES RELEVANT TO YOUR TOPIC. USE AND ADD TO THE LIST OF REFERENCES.
9. PLEASE READ OTHER ARTICLES OF THIS JOURNAL. CORRECT THE STRUCTURE AND SHORTCOMINGS OF YOUR ARTICLE BY TAKING A LOOK AT THEM. I THINK YOU ARE ABLE TO MAKE THESE ADJUSTMENTS.
Author Response
In this set of responses, we are responding to the anonymous reviewer #1's comments. The reviewer had 9 comments. We thank her/him for these comments and believe the manuscript is improved because we have responded to them. We provide the response to each comment below:
Author Response File: 
Author Response.docx
Reviewer 2 Report
Dear Authors
The article presents an important and current topic. It is interesting and clearly written. I would like to present my comments. I hope you find them useful.
Comments and suggestions:
1. In my opinion, the concept of "innovation" in the theoretical part of the article requires a broader comment/development. The development should be made in the light of the current literature on innovation. It is worth clarifying that innovation is a broad concept. It often does not require research and experimental development (R&D) and involves the diffusion of existing technologies and practices across an economy (e.g. Oslo Manual 2018 OECD/Eurostat, https://doi.org/10.1787 /9789264304604-en). It can be clarified that this study refers to the R&D area.
2. In the theoretical part, it seems reasonable to present in more detail the possibilities and tasks of both central and local authorities in the field of supporting innovativeness of enterprises. This is especially important in relation to local authorities. This is important because it will enable a closer link between the content of the article and its conclusions. It will also provide an opportunity to develop recommendations for local policy.
3. In conclusion, it is worth developing the title issue "heterogeneous effects" of a subsidies on firm's innovation. It is worth developing the discussion and unequivocally verifying the formulated hypothesis.
4. The description of the sampling in lines 137-143 is not very clear and complete. Why were 10 groups distinguished? Why were there two more groups in each group? Were geographic criteria used in the selection process? Why were entities with a higher registered capital value selected? Were these enterprises engaged in agricultural activity or were they part of the agribusiness sector - e.g. dealing in raw material trading?
5. It would be advisable to present the general characteristics of the surveyed enterprises and the implemented patents.
Other remarks:
1. Please, verify the charts. Remove titles from the chart area. Take care of the description of the axes of the charts and the indication of the sources of the charts, the names of the columns.
2. Please, explain all abbreviations, eg IPR.
Thank you
Author Response
In this set of responses, we are responding to the anonymous reviewer #2's comments. The reviewer had one general comment and six specific comments. We thank her/him for these comments and believe the manuscript is improved because we have responded to them. We provide the response to each comment below:
Author Response File: Author Response.docx
Reviewer 3 Report
In general, this is an interesting text on an important subject. However, three basic things need to be revised:
1) The text should follow the usual structure of papers in Sustainability.
2) The text should take full account of the extensive academic debate on the opportunities and limits of subsidies (see recently Heyl/ Ekardt/ Sund/ Roos, Sustainability 2022).
3) Accordingly, the references must also be broadened many times over.
Author Response
评审#3，
您好，十分感谢您对本文提出的意见和评论，我的回复如下。
1) The text should follow the usual structure of papers in Sustainability.
Reply_: 好的，我会尽快修改。
2) The text should take full account of the extensive academic debate on the opportunities and limits of subsidies (see recently Heyl/ Ekardt/ Sund/ Roos, Sustainability 2022).
Reply_: 好的，关于本文研究中的机会和局限性我们将会在文章中会有进一步的讨论。
3) Accordingly, the references must also be broadened many times over.
Reply_: 好的，我会尽快修改。
Author Response File: Author Response.docx
Reviewer 4 Report
The purpose of the research is interesting and worth researching to examine the impact of central and local subsidies on China firms’ innovation.
I list my comments as follows
1. I recommend re-checking the document
2. Major language and reformulation errors need to be corrected
3. Figure 1 and Figure 2 should be revised. The data presented on the OY axis is not clear.
4. In equations 2, 3 and 5, you considered as independent variables
Equation 2 - central subsidy and total subsidy
Equation 3 – central, local and total subsidy
Equation 5 – local subsidy and total subsidy
Considering that total subsidy = central subsidy + local subsidy (lines 218-2019), multicollinearity occurs.
You should keep only one variable in the case of equations 2 and 3, respectively one or two (if you consider central and local) in the case of the equation 3
5. In the case of table 4, the same situation is found regarding the three independent variables presented above. The total subsidy variable is determined based on the two central and local variables.
6. In table 6 there is a zero missing in the row of R-squared. For example, 345 instead of 0.345.
7. Present some limitations of the research
8. Re-check the references list
Author Response
评审#4，
您好，谢谢您的意见和评论，以下是我的回复。
- I recommend re-checking the document
Reply_: 好的，我会尽快修改。
- Major language and reformulation errors need to be corrected
Reply_: 好的，我会尽快修改。
- Figure 1 and Figure 2 should be revised. The data presented on the OY axis is not clear.
Reply_: 好的，我会尽快修改。
- In equations 2, 3 and 5, you considered as independent variables
Equation 2 - central subsidy and total subsidy
Equation 3 – central, local and total subsidy
Equation 5 – local subsidy and total subsidy
Considering that total subsidy = central subsidy + local subsidy (lines 218-2019), multicollinearity occurs.
You should keep only one variable in the case of equations 2 and 3, respectively one or two (if you consider central and local) in the case of the equation 3
Reply_: 谢谢您提出的这个意见。多重共线性（multicollinearity）的主要后果是会导致对单个变量贡献估计不准确。但我们的回归结果显示，多重共线性并不影响所关心变量（central subsidy ，local subsidy）的显著性，因此在这里没必要过多关注这个问题。即使在有方差膨胀（VIF）的情况下，这些系数依然显著；如果没有多重共线性，则这些系数只会更加显著。
- In the case of table 4, the same situation is found regarding the three independent variables presented above. The total subsidy variable is determined based on the two central and local variables.
Reply_: 谢谢您提出的这个意见。多重共线性（multicollinearity）的主要后果是会导致对单个变量贡献估计不准确。但我们的回归结果显示，多重共线性并不影响所关心变量（central subsidy ，local subsidy）的显著性，因此在这里没必要过多关注这个问题。即使在有方差膨胀（VIF）的情况下，在我们的回归中，这些系数依然显著；如果没有多重共线性，则这些系数只会更加显著。
- In table 6 there is a zero missing in the row of R-squared. For example, 345 instead of 0.345.
Reply_: 好的，我会尽快修改。
- Present some limitations of the research
Reply_: 好的，关于本文研究中的局限性我们将会在文章末尾有一个说明。
- Re-check the references list
Reply_: 好的，我会尽快修改。
Author Response File: Author Response.docx
Round 2
Reviewer 1 Report
We are pleased with the authors' answers. But the abstract should show the whole picture and the essence of the article. It's like a mini review of the article.
Comments for author File: 
Comments.pdf
Author Response
Comments from Reviewer #1
We are pleased with the authors' answers. But the abstract should show the whole picture and the essence of the article. It's like a mini review of the article.
Response:
Following this comment, we re-edited the Abstract. In the reversed version, the Abstract is more than 200 words and includes: background, data and methods, major estimation results, conclusion and implications, which is a mini review of the article. The reversed version of the Abstract now reads (Lines 4-18):
Abstract: Four decades of rapid economic growth have enabled the Chinese government to dedicate more resources to research and development. China is the world's second largest spender on food and agricultural research in terms of absolute expenditures and the largest investor on a purchasing power parity basis. Using a unique panel data set collected in 2019 in China’s seed company and fixed effect models, this study analyzes the heterogeneous effects of central subsidies and local subsidies. Specifically, this study first tests whether government subsidies have a positive impact on firms' innovation. Then, this study answers whether the impact of local subsidies differs from that of central subsidies. The estimation results show that the central subsidies positively contribute to firms’ innovation, while the impact of local subsidies on firms’ innovation has not been confirmed. Further analysis shows that local subsidies positively affect firms’ economic performance. That is, rather than focusing on research capacity, local governments are more concerned about firms’ current economic performance due to the performance-based promotion scheme in China. Base on this study, local governments should implement similar methods to those of the central government in research project founding and criteria for selecting research projects to promote firms’ innovation.
Reviewer 3 Report
The authors have indeed adapted the structure of their text. However, they need to work through the rest of the reviewer's comments much more thoroughly.
Author Response
Comments from Reviewer #3
The authors have indeed adapted the structure of their text. However, they need to work through the rest of the reviewer's comments much more thoroughly.
Response:
Following this comment, we add one more paragraph at the end of Estimation results section, which reads (Lines 374-383):
Even though this study focuses on the heterogeneous effects of central and local subsidies on firms’ innovation, and the impact of different innovations on sustainability varies, it is worth noting that there is a debate on the opportunities and limits of subsidies [42]. Some studies showed that the relationship between technological innovation and sustainability is positive in energy industry [43-46] and agricultural sector [47]. Others studies showed that innovation either fails to meet the sustainable goals [48], or the impact varies over time [49,50] and across counties [51,52]. In addition, Heyl et al (2022) showed that agricultural subsidies need to be substantially downscaled and implemented as complementary instruments in transitioning the agricultural sector to be in line with global environmental goals.
- Heyl, K.; Ekardt, F.; Sund, L.; Roos, P. Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture. Sustainability, 2022, 14(23), 15859.
- Guo, P.; Wang, T.; Li, D.; Zhou, X. How Energy Technology Innovation Affects Transition of Coal Resource-Based Economy in China. Energy Policy, 2016, 92(C), 1-6.
- Lee, K.H.; Min, B. Green R&D for Eco-Innovation and Its Impact on Carbon Emissions and Firm Performance. Journal of Cleaner Production, 2015, 108, 534-542.
- Leng Wong, S.; Chia, W.M.; Chang, Y. Energy consumption and energy R&D in OECD: perspectives from oil prices and economic growth. Energy Policy, 2013, 62(C), 1581-1590.
- Li, M.; Wang, Q. Will Technology Advances Alleviate Climate Change? Dual Effects of Technology Change on Aggregate Carbon Dioxide Emissions. Energy for Sustainable Development, 2017, 41, 61-68.
- Long, X.; Luo, Y.; Wu, C.; Zhang, J. The Influencing Factors of CO2 Emission Intensity of Chinese Agriculture from 1997 to 2014. Environmental Science and Pollution Research, 2018, 25(13), 13093-13101.
- Garrone, P.; Grilli, L. Is There a Relationship between Public Expenditures in Energy R&D and Carbon Emissions per GDP? An Empirical Investigation. Energy Policy, 2010, 38(10), 5600-5613.
- Awaworyi Churchill, S.; Inekwe, J.; Smyth, R.; Zhang, X. R&D Intensity and Carbon Emissions in the G7: 1870–2014. Energy Economics, 2019, 80(C), 30-37.
- Zhang, Y.J.; Peng, Y.L.; Ma, C.Q.; Shen, B. Can Environmental Innovation Facilitate Carbon Emissions Reduction? Evidence from China. Energy Policy, 2017, 100(C), 18-28.
- Fernández Fernández, Y.; Fernández López, M.A.; Olmedillas Blanco, B. Innovation for sustainability: the impact of R&D spending on CO2 emissions. Journal of Cleaner Production, 2018, 172, 3459-3467.
52. Petrović, P.; Lobanov, M.M. The impact of R&D expenditures on CO2 emissions: evidence from sixteen OECD countries. Journal of Cleaner Production, 2020, 248, 119187.
Reviewer 4 Report
Thank you for taking into consideration my commets and suggestions.
The manuscript is significantly improved.
Author Response
Thank you for taking into consideration my comments and suggestions. The manuscript is significantly improved.
Response:
We would like to express our appreciation for your time and help again. We believe our manuscript is improved because of your useful suggestions.
Round 3
Reviewer 3 Report
no further comments
