Dear Dr. Tu,

Thank you for submitting your manuscript to PLOS ONE. After careful consideration, we feel that it has merit but does not fully meet PLOS ONE’s publication criteria as it currently stands. Therefore, we invite you to submit a revised version of the manuscript that addresses the points raised during the review process.

Please submit your revised manuscript by Jan 25 2026 11:59PM. If you will need more time than this to complete your revisions, please reply to this message or contact the journal office at plosone@plos.org. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.

• A rebuttal letter that responds to each point raised by the academic editor and reviewer(s). You should upload this letter as a separate file labeled 'Response to Reviewers'.
• A marked-up copy of your manuscript that highlights changes made to the original version. You should upload this as a separate file labeled 'Revised Manuscript with Track Changes'.
• An unmarked version of your revised paper without tracked changes. You should upload this as a separate file labeled 'Manuscript'.

If you would like to make changes to your financial disclosure, please include your updated statement in your cover letter. Guidelines for resubmitting your figure files are available below the reviewer comments at the end of this letter.

If applicable, we recommend that you deposit your laboratory protocols in protocols.io to enhance the reproducibility of your results. Protocols.io assigns your protocol its own identifier (DOI) so that it can be cited independently in the future. For instructions see: https://journals.plos.org/plosone/s/submission-guidelines#loc-laboratory-protocols. Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at https://plos.org/protocols?utm_medium=editorial-email&utm_source=authorletters&utm_campaign=protocols....

We look forward to receiving your revised manuscript.

Kind regards,

Tatchalerm Sudhipongpracha

Academic Editor

PLOS One

Journal requirements:

When submitting your revision, we need you to address these additional requirements.

1. Please ensure that your manuscript meets PLOS ONE's style requirements, including those for file naming. The PLOS ONE style templates can be found at

https://journals.plos.org/plosone/s/file?id=wjVg/PLOSOne_formatting_sample_main_body.pdf and

https://journals.plos.org/plosone/s/file?id=ba62/PLOSOne_formatting_sample_title_authors_affiliations.pdf

2. Please provide a complete Data Availability Statement in the submission form, ensuring you include all necessary access information or a reason for why you are unable to make your data freely accessible. If your research concerns only data provided within your submission, please write "All data are in the manuscript and/or supporting information files" as your Data Availability Statement.

3. If the reviewer comments include a recommendation to cite specific previously published works, please review and evaluate these publications to determine whether they are relevant and should be cited. There is no requirement to cite these works unless the editor has indicated otherwise.

Additional Editor Comments (if provided):

[Note: HTML markup is below. Please do not edit.]

Reviewers' comments:

Reviewer's Responses to Questions

Comments to the Author

1. Is the manuscript technically sound, and do the data support the conclusions?

Reviewer #1: Partly

Reviewer #2: Yes

**********

2. Has the statistical analysis been performed appropriately and rigorously? -->?>

Reviewer #1: Yes

Reviewer #2: Yes

**********

3. Have the authors made all data underlying the findings in their manuscript fully available??>

The PLOS Data policy requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.-->

Reviewer #1: No

Reviewer #2: Yes

**********

4. Is the manuscript presented in an intelligible fashion and written in standard English??>

Reviewer #1: Yes

Reviewer #2: Yes

**********

Reviewer #1: The reviewed article examines an intriguing topic: the role of local governments in supporting innovation, particularly in enterprises they own. However, this issue is specific to China for two main reasons. First, local governments own state-owned companies (SOCs) that operate in private, and even international, markets—not just in areas related to municipal services. Second, the Chinese model of decentralization is distinct; it constitutes a form of delegation rather than true decentralization as defined by fiscal decentralization theory. While the authors touch on this in the article, it should have been emphasized in the title. Additionally, the article should explain why this topic might interest readers from other countries where such solutions do not exist.

One issue is that the authors claim to focus on technology companies, but this is not evident in the sample presented. They refer to patents as a measure of technological innovation; however, patents can address a wide range of issues beyond just innovative technological solutions. It might be more appropriate to discuss innovative companies in general, rather than strictly focusing on innovations in new technologies. Alternatively, it could be helpful to clarify that this issue pertains specifically to new technologies.

Another concern is the lack of a reference that highlights a characteristic feature of the Chinese model of power division—namely, the competition among local authorities for the competition among local authorities for "points" from the central government. (see for example Yu, C., Hou, L., Lyu, Y., & Zhang, Q. (2022). Political competition, spatial interactions, and default risk of local government debts in China. Papers in Regional Science, 101(3), 717–743. Retrieved from https://doi.org/10.1111/pirs.12668) I believe this is a crucial factor in understanding why local authorities support actions favored by the central government, as evidenced by the quote at the line 522.

Here are a few additional suggestions:

1. Including a table that lists the names and descriptions of the variables would enhance navigation throughout the article.

2. The statistics table should present the data before logarithmization, as it is important and interesting to see for example the actual number of patents filed by individual companies and the extent of variation. If I calculated correctly, the maximum is about 800 patents per year, which is a significant figure. It may be worth exploring what type of company is responsible for such a remarkable level of innovation.

Reviewer #2: This manuscript explores the effects of fiscal decentralization on enterprise-level technological innovation in China through a moderated mediation model embedded within a three-tier principal-agent framework involving central government, local governments, and enterprises. The topic is timely and relevant for local governance and fiscal policy studies. The empirical strategy is clearly articulated and supported by robustness checks and instrumental variable analysis. However, there are several areas that should be improved. The following are my detailed comments.

My first concern is that while the manuscript invokes a three-tier “principal-agent” framework, the conceptual clarity is lacking. Theoretical underpinnings (i.e., linkage between fiscal decentralization and innovation suppression) are insufficiently grounded in local governance literature. The authors mostly cite economic literature, overlooking well-established debates in public administration and fiscal federalism regarding vertical accountability, local autonomy, and institutional capacity. The author may enhance the theoretical framework by integrating key works in local governance and decentralization theory. Please also consider how institutional quality, local political capacity, and discretion mediate the impact of decentralization on policy outcomes.

Second, the use of “local government innovation preference” as a mediating variable is both central and problematic. Its operationalization via the ratio of science & tech expenditure to general budget lacks depth and does not convincingly reflect "preference"—a psychological and political orientation—especially when interpreted as a mediating institutional mechanism.

Third, the author employs the interaction between geographic distance to Beijing and a time trend as an instrument for fiscal decentralization. While this aligns with some spatial attenuation logic, the justification for exclusion restriction remains weak. Geographic distance could plausibly correlate with regional developmental trajectories, market access, and innovation potential. This undermine the exogeneity assumption.

Fouth, the manuscript idealizes SOEs as effective agents of innovation without sufficient critical reflection. It claims SOEs overcome “market failure” via dual coordination mechanisms but downplays inefficiencies, rent seeking, or governance challenges associated with SOEs in China and elsewhere. Please balance the discussion with references to literature on SOE inefficiencies and performance heterogeneity.

**********

what does this mean?). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.

If you choose “no”, your identity will remain anonymous but your review may still be made public.

Do you want your identity to be public for this peer review? For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our Privacy Policy..-->

Reviewer #1: No

Reviewer #2: No

**********

[NOTE: If reviewer comments were submitted as an attachment file, they will be attached to this email and accessible via the submission site. Please log into your account, locate the manuscript record, and check for the action link "View Attachments". If this link does not appear, there are no attachment files.]

To ensure your figures meet our technical requirements, please review our figure guidelines: https://journals.plos.org/plosone/s/figures

You may also use PLOS’s free figure tool, NAAS, to help you prepare publication quality figures: https://journals.plos.org/plosone/s/figures#loc-tools-for-figure-preparation.

NAAS will assess whether your figures meet our technical requirements by comparing each figure against our figure specifications.

Dear Dr. Tu,

Thank you for submitting your manuscript to PLOS ONE. After careful consideration, we feel that it has merit but does not fully meet PLOS ONE’s publication criteria as it currently stands. Therefore, we invite you to submit a revised version of the manuscript that addresses the points raised during the review process.

Please submit your revised manuscript by Mar 28 2026 11:59PM. If you will need more time than this to complete your revisions, please reply to this message or contact the journal office at plosone@plos.org. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.. When you're ready to submit your revision, log on to https://www.editorialmanager.com/pone/ and select the 'Submissions Needing Revision' folder to locate your manuscript file.

• A letter that responds to each point raised by the academic editor and reviewer(s). You should upload this letter as a separate file labeled 'Response to Reviewers'.
• A marked-up copy of your manuscript that highlights changes made to the original version. You should upload this as a separate file labeled 'Revised Manuscript with Track Changes'.
• An unmarked version of your revised paper without tracked changes. You should upload this as a separate file labeled 'Manuscript'.

If you would like to make changes to your financial disclosure, please include your updated statement in your cover letter. Guidelines for resubmitting your figure files are available below the reviewer comments at the end of this letter.

If applicable, we recommend that you deposit your laboratory protocols in protocols.io to enhance the reproducibility of your results. Protocols.io assigns your protocol its own identifier (DOI) so that it can be cited independently in the future. For instructions see: https://journals.plos.org/plosone/s/submission-guidelines#loc-laboratory-protocols. Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at . Additionally, PLOS ONE offers an option for publishing peer-reviewed Lab Protocol articles, which describe protocols hosted on protocols.io. Read more information on sharing protocols at https://plos.org/protocols?utm_medium=editorial-email&utm_source=authorletters&utm_campaign=protocols....

We look forward to receiving your revised manuscript.

Kind regards,

Tatchalerm Sudhipongpracha

Academic Editor

PLOS One

Journal Requirements:

1. If the reviewer comments include a recommendation to cite specific previously published works, please review and evaluate these publications to determine whether they are relevant and should be cited. There is no requirement to cite these works unless the editor has indicated otherwise.

[Note: HTML markup is below. Please do not edit.]

Reviewers' comments:

Reviewer's Responses to Questions

Comments to the Author

Reviewer #1: All comments have been addressed

Reviewer #2: All comments have been addressed

**********

2. Is the manuscript technically sound, and do the data support the conclusions??>

Reviewer #1: Partly

Reviewer #2: Yes

**********

3. Has the statistical analysis been performed appropriately and rigorously? -->?>

Reviewer #1: No

Reviewer #2: Yes

**********

4. Have the authors made all data underlying the findings in their manuscript fully available??>

The PLOS Data policy requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.-->

Reviewer #1: Yes

Reviewer #2: Yes

**********

5. Is the manuscript presented in an intelligible fashion and written in standard English??>

Reviewer #1: Yes

Reviewer #2: Yes

**********

Reviewer #1: The authors addressed most of the comments, but I still have some doubts:

1. For example, I wonder if the logic presented in the introduction about the negative impact of decentralization on innovation under the Chinese model of decentralization is valid. (lines 85-89) After all, if we have a system in which local authorities strive to obtain "points" from the state, they will decide to implement innovative activities as long as they are consistent with state policy. Moreover, they will decide to implement such activities even against the needs of residents – because it is not their needs, but the center's recommendations that are being implemented in such circumstances. Moreover, it is precisely this logic that the authors demonstrate in their conclusion.

2. In the previous comments, I noted that, given the specificity of China, one should ask why its analysis might be interesting to an international audience. The only argument the authors managed to find referred to readers from other centralized countries. This is not convincing. In my opinion, it would be worthwhile, for example, to demonstrate in the conclusions whether and how these conclusions can/cannot be transferred to other countries with different decentralization systems (what other forms of support for specific actions important for the entire country can state authorities undertake in other countries, and whether this is effective – I recommend, for example, literature on decentralization and environmental protection).

3. Thank you for organizing the variables in the table. This makes it much easier to follow the models, and it clearly shows that the descriptions of variables that are crucial to the work's purpose are missing definitions. Specifically, how is the fiscal autonomy indicator measured – where is its definition? Similarly, I don't see a definition of the revenue decentralization indicator or the expenditure decentralization indicator.

4. The authors briefly comment on the variables' statistics, but they do so in a very mechanical manner. From the perspective of the article's purpose, it would be interesting to show and discuss the differences and correlations of the most important variables, combined with detailed information. For example, does any particular region stand out in the statistics (in terms of the number of patents), or do the statistics show differences between patents filed by SOEs and private companies. Which companies (by name) are among those filing the most patents? Perhaps some industries stand out?

5. With regard to models and inferences about the influence of local governments on SOEs vs. private companies, it would be reasonable to conduct separate models for these types of companies and also, in the initial models (before adding the mediation mechanism), include the interaction of ownership type with the level of decentralization

Reviewer #2: Thank you for addressing all my previous comments. I really appreciate your efforts. Therefore, I recommend accepting this paper in its current version.

**********

what does this mean?). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.

If you choose “no”, your identity will remain anonymous but your review may still be made public.

Do you want your identity to be public for this peer review? For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our Privacy Policy..-->

Reviewer #1: No

Reviewer #2: No

**********

[NOTE: If reviewer comments were submitted as an attachment file, they will be attached to this email and accessible via the submission site. Please log into your account, locate the manuscript record, and check for the action link "View Attachments". If this link does not appear, there are no attachment files.]

To ensure your figures meet our technical requirements, please review our figure guidelines: https://journals.plos.org/plosone/s/figures

You may also use PLOS’s free figure tool, NAAS, to help you prepare publication quality figures: https://journals.plos.org/plosone/s/figures#loc-tools-for-figure-preparation.

NAAS will assess whether your figures meet our technical requirements by comparing each figure against our figure specifications.

Fiscal Delegation, Local Government Innovation Preference, and Enterprise Technological Innovation: Evidence from China

PONE-D-25-42189R2

Dear Dr. Tu,

We’re pleased to inform you that your manuscript has been judged scientifically suitable for publication and will be formally accepted for publication once it meets all outstanding technical requirements.

Within one week, you’ll receive an e-mail detailing the required amendments. When these have been addressed, you’ll receive a formal acceptance letter and your manuscript will be scheduled for publication.

An invoice will be generated when your article is formally accepted. Please note, if your institution has a publishing partnership with PLOS and your article meets the relevant criteria, all or part of your publication costs will be covered. Please make sure your user information is up-to-date by logging into Editorial Manager at Editorial Manager® and clicking the ‘Update My Information' link at the top of the page. For questions related to billing, please contact  and clicking the ‘Update My Information' link at the top of the page. For questions related to billing, please contact  and clicking the ‘Update My Information' link at the top of the page. For questions related to billing, please contact  and clicking the ‘Update My Information' link at the top of the page. For questions related to billing, please contact billing support....

If your institution or institutions have a press office, please notify them about your upcoming paper to help maximize its impact. If they’ll be preparing press materials, please inform our press team as soon as possible -- no later than 48 hours after receiving the formal acceptance. Your manuscript will remain under strict press embargo until 2 pm Eastern Time on the date of publication. For more information, please contact onepress@plos.org.

Kind regards,

Tatchalerm Sudhipongpracha

Academic Editor

PLOS One

Additional Editor Comments (optional):

Reviewers' comments:

Reviewer's Responses to Questions

Comments to the Author

Reviewer #1: All comments have been addressed

**********

2. Is the manuscript technically sound, and do the data support the conclusions??>

Reviewer #1: Yes

**********

3. Has the statistical analysis been performed appropriately and rigorously? -->?>

Reviewer #1: Yes

**********

4. Have the authors made all data underlying the findings in their manuscript fully available??>

The PLOS Data policy requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.-->

Reviewer #1: Yes

**********

5. Is the manuscript presented in an intelligible fashion and written in standard English??>

Reviewer #1: Yes

**********

Reviewer #1: Thank you for considering my previous comments. I have no additional comments to add.

One aspect to consider for future studies is the measurement of innovation, particularly regarding long-term activities, through patent counts. Existing literature suggests that patents do not always equate to actual innovation, and not all innovations are protected by patents.

**********

what does this mean?). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.). If published, this will include your full peer review and any attached files.

If you choose “no”, your identity will remain anonymous but your review may still be made public.

Do you want your identity to be public for this peer review? For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our For information about this choice, including consent withdrawal, please see our Privacy Policy..-->

Reviewer #1: No

**********