The Influence of Venture Capital on Growth through Innovation and the Use of Internet Technology in Micro and Small Industries (MSIs) in Indonesia

Round 1

Reviewer 1 Report

Overall an interesting topic.  A prirmary concern is that there is often a chicken-egg problem - which comes first - is innovation attracting venture capital or is innovation the result of higher funding.  You need to address this problem - Bertoni et al. 2010; Smith and Cordina, 2015.  This is a major issue which needs to be addressed.  Please ensure in-text citations are in the appropriate format required by the journal.

Introduction

In the introduction you mention that this research is conducted "in the developing countries in Asia"; you need to highlighted that this is only in one of the developing countries in Asia.

Literature review

The literatrure review on innovation needs to address the key problem outined in the opening paragraph of my comments.

This section should be named literature review and hypotheses.  In addition the model (figure 1) needs to be adjusted such that the text in the boxes does not split words into multiple lines.  

Methodology

In page 7 line 28 you refer to a previous study and do not identify which previous study this is.  I would have expected some reference to previous studies which use similar approaches in order to justif the approach table.

Table 2 needs to be adjusted to show clearly what the variables are (as opposed to the code used).  In 4.2 "previos study" should read "previous study"

It does not appear that robustness testing has been carried out for the models.

In section 6 - you need to state what are the limitations of the study.

Author Response

Cover Letter

02 Sept 2022

Dear Reviewer,

Thank you for the opportunity to review my manuscript. I will answer questions from reviewers and give me a chance to fix it.

In general, I have corrected and made changes to the composition of my manuscript, including the following:

1. Grammar: I have done proofreading through the services of a translation agency.
2. Title: as suggested by proofreader the word Impacts replaced with influence
3. Abstract: Addition of a few sentences to the abstract. Page 1 lines 13-14. This study proves that venture capital increases innovation activities and accelerates growth.
4. Introduction: There are several paragraphs that I moved their positions, page 1 line 18 and there are additional paragraphs to strengthen the reason for this research. page 1 line 36-41. Added research question. lines 59-62 of page 2.
5. Literature review and hypotheses: Adding related innovation issues. page 2 lines 89-103
6. Methodology: Adding reasons for using logistic regression and differences with previous research. page 6 lines 273-303
7. Result: Improving statistical results using logistic regression after conducting the robustness test and the results are not too different from before doing the robust test. Page 8 lines 339-342 and adding table 6 Hypothesess Result Test. Page 9 lines 402-403.
8. Conclution and limitations; I added some limitations on page 12 lines 514-521

For more details, I have attached a comment response from the reviewer in the appendix section

Thank you for all the suggestions and input that have been given to me, I hope that my article can be published in this journal. If there's still something to fix I'm ready to fix it again. 

May you always be in god's protection, healthy and success. Thank you very much.

Regards,

 

Authors

Author Response File: Author Response.pdf

Reviewer 2 Report

Dear Authors,

 

Thank you for the opportunity to review your manuscript. Venture funding is a very interesting area of research. On this occasion, I would like to provide my feedback on three main areas: (1) language, format and editing, (2) conceptualisation on operationalisation, and (3) results and conclusions.

 

(1) language, formatting and editing

* Please make sure that the prescribed referencing format is applied, both in-text and end of paper references.

* Please ensure that all your acronyms and abbreviations are explained sufficiently. For example IMK is not explained, and it remains unclear whether SME and SMI are the same thing.

* There are several language problems, unclear and unfinished sentences and loose punctuation, which need to be fixed. Please consider engaging a professional language editor.

* In some tables, I seem to find non English headings, please audit that as well.

 

(2) conceptualisation and operationalisation

* Sampling: I am not an expert in Indonesia, but it seems to me that a total population of 90k SMEs in Indonesia seems a little low. Could you please clarify how this population was selected and what the sample of 83k SMEs means in practice, in terms of representation, etc.

* The operationalisation of the variables in the study seem problematic. Please include more detail to justify the dichotomous classification, especially for growth. What was growth measured on? Revenue? What if the difference between a 0.01% growth and a -0.01% growth? What was the rationale of dichotomizing? Has there been any tax evasion bias in the growth figures? (Unfortunately it is not uncommon among small holders in developing nations to under-report revenues for tax optimizing purposes.)

* Please provide rationale for specifying the metrics for all variables used.

* Please provide rationale for using logistic regression. You mention that it was used instead of PSM. What is the benefit of shifting the method to regression?

* Please consider the difference between correlation and causality. The underlying assumption in this paper seems to be that venture funding leads to business growth. However, it may be the other way around, not to speak of a temporal dimension of this relationship as well. Is it possible, that venture funding and growth are somehow endogenous to one another (e.g. past funding leads to current growth, which leads to future funding…)?

* Is there an overarching research question? Considering the hypothesising, what seems to be the novelty of your research project? Please ensure to explain the contribution to the body of knowledge clearly.

(3) results and conclusions

Your discussion reaches back to the literature review, which is good. However, the novelty of the paper still seems to be missing. Please make sure to set up a clear research question, and a response to this needs to be derived from your discussions. I understand that the reference material and benchmark for a lot of finance studies may be viewed as the US. However, the institutional differences between the US and Indonesia are so vast, that I struggle to see the relevancy of US findings on Indonesia. Is there literature somewhat ‘closer to home’ on the subject? Perhaps another economy with a similar performance and location? I know plenty of studies exist from Malaysia and Vietnam.

Contributions need to be clarified, for example I do not quite understand what is non-financial financing supposed to mean. And in terms of practice, considering the correlation-causality question, what is it that the authors can really recommend to practice, and which practice is that? Businesses or policy? I would imagine, that policy implications are easier to derive from this study.

Unfortunately, I feel that the article needs some re-thinking before it can progress to publication. I hope my comments were useful in facilitating this thinking.

Good luck with your revisions.

 

Regards,

 

A reviewer

Author Response

Cover Letter

02 Sept 2022

 

Dear Reviewer,

Thank you for the opportunity to review my manuscript. I will answer questions from reviewers

and give me a chance to fix it.

 

In general, I have corrected and made changes to the composition of my manuscript, including the following:

1. Grammar: I have done proofreading through the services of a translation agency.
2. Title: as suggested by proofreader the word Impacts replaced with influence
3. Abstract: Addition of a few sentences to the abstract. Page 1 lines 13-14. This study proves that venture capital increases innovation activities and accelerates growth.
4. Introduction: There are several paragraphs that I moved their positions, page 1 line 18 and there are additional paragraphs to strengthen the reason for this research. page 1 line 36-41. Added research question. lines 59-62 of page 2.
5. Literature review and hypotheses: Adding related innovation issues. page 2 lines 89-103
6. Methodology: Adding reasons for using logistic regression and differences with previous research. page 6 lines 273-303
7. Result: Improving statistical results using logistic regression after conducting the robustness test and the results are not too different from before doing the rebust test. Page 8 lines 339-342 and adding table 6 Hypothesess Result Test. Page 9 lines 402-403.
8. Conclution and limitations; I added some limitations on page 12 lines 514-521

 

For more details, I have attached a comment response from the reviewer in the appendix section

 

Thank you for all the suggestions and input that have been given to me, I hope that my article can be published in this journal. If there's still something to fix I'm ready to fix it again. 

May you always be in god's protection, healthy and success. Thank you very much.

Regards,

 

Authors

 

 

 

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

I still think that the references are presented incorrectly.

You have in-text citations at the start of a sentence in brackets e.g. line 129.  A thorough review of these is necessary.

Otherwise I'm happy with the changes apart from minor grammatical errors which are still there.

 

 

Author Response

Wednesday, 28 September 2022 Dear Reviewer Thank you for your suggestion and comment to my manuscript, I try to answer your comment. I still think that the references are presented incorrectly. You have in-text citations at the start of a sentence in brackets e.g. line 129. A thorough review of these is necessary. Thank you for the suggestions and input that have been given to me, all citations and references have been corrected according to the journal's instructions. Otherwise I'm happy with the changes apart from minor grammatical errors which are still there. I say many thanks for all the suggestions and input that mean a lot to the improvement of my manuscript. Regards Author

Author Response File: Author Response.pdf

Reviewer 2 Report

Dear Author(s),

 

Thank you for providing a detailed description of adjustments taken in response to my comments and suggestions.

 

I would like to continue exploring some of the ongoing aspects of our dialogue.

1.       I appreciate that the article has undergone professional language editing, thank you. Unfortunately the letter you have attached contains names, which in turn resulted in my finding out your identity, which may be considered a breach of the double blind peer review process. I will need to alert the editors to this breach, my position as a reviewer may not continue to be appropriate. For future reference, the outcome in this regard is more important than the process, and I do not believe an evidence of professional language editing is necessary, I will be able to see / read the improvements. However, if you wish to demonstrate the work done, I suggest you append a version of the manuscript with track changes to your letter, so the reviewer can see in exact detail all the changes which have been made. This seems like a very robust way of showing the changes you made, and does not breach the rules of the peer review process. Having had a look at the results, unfortunately I need to suggest that you should find a better proof reader for your academic papers.

2.       I also appreciate the remark regarding the formatting of the references. Reference manager software have two common issues: 1) if you populate the fields in the software with errors, the software will not fix those, therefore references may have errors in them. Common issues include upper case titles, missing page or issue numbers from journals, etc. 2) The reference manager may have a version of the referencing style coded, while the journal may require another version, which may be slightly different. Please ensure that you manually edit ALL references after using a reference manager for accuracy and errors.

3.       I am not sure if I understand your response regarding SMIs and acronyms. After revision, the manuscript seems to completely lack the acronym SMI, which seems to have been completely removed as opposed to explained, which you were suggesting in your response.

4.       I was not familiar with the expression SMI until you defined it. I am afraid I cannot endorse your definition though, because it is unclear WHICH industrial sector you mean. Did you mean manufacturing? Or simply not services or retail? It would help if you used for example the ISIC Rev4 classification to define your target industries.

5.       I am afraid that we have a misunderstanding regarding the definition of what constitutes a population and what is a sample. The population is all of the subjects of interest, and a sample is those which we have information about. Having this in mind, what would you suggest was your total population and what does it mean that some were not included in your sample?

6.       I understand that your dependent variable has been defined as a dummy, and in this case, there is no option but to use a logistic regression. What I ask you to justify is WHY you coded that variable as a dummy, and not as a % score like many other authors have done in the past. You had the data. So why was it better to recode those variables?

7.       I simply cannot comprehend the arguments you have presented with the issue around PSM. Can you please rephrase?

8.       I am sorry, but you did not respond to my question regarding correlation vs causality, or written anything regarding endogeneity.

9.       I asked you about your overarching research question. You did not address this in your response, however in your manuscript you have given 3. I strongly suggest that you explore literature in relation to how certain research questions relate to certain methods. Again, the research questions you included were basically hypotheses in a question format. What is the broad question you are investigating? Stating it in the beginning helps the reader through the manuscript and guides your final point to be made.

10.   Thank you for your clarification regarding additional literature requested. I suppose if you did not find relevant literature in these countries, I need to accept that they are not there.

11.   In terms of your conclusions and implications, can you please be specific as to which theory you actually used to build your model, and how do your results contribute to this theory? Regarding your policy implications, you say that the government needs to ‘socialize’ the idea of importance of venture capital. Is this because the general SME/I owners do not want venture capital? Or is it because there is not enough available? I do not feel that this is actually being subjected to research in your paper, however if this is the case, and you can make reference to it in literature, what you conclude can be productive in light of the results.

 

Please take a look at my comments, and have another attempt at addressing them. Good luck with your manuscript.

 

Regards,

 

A reviewer.

Author Response

Wednesday, 28 September 2022

Dear Reviewer

Thank you for all your comment and suggestion for my manuscript

Please let me explain my reason about your question.  

For more details, I have attached a comment response from the reviewer.

Thank you for all the suggestions and input that have been given to me, I hope that my article can be published in this journal.

May you always be in god's protection, healthy and success. Thank you very much.

Regards,

 

Authors

Author Response File: Author Response.pdf