Advances in business and management volume 10

ADVANCES IN BUSINESS AND MANAGEMENT

ADVANCES IN BUSINESS
AND MANAGEMENT
VOLUME 10

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ADVANCES IN BUSINESS
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ADVANCES IN BUSINESS AND MANAGEMENT

ADVANCES IN BUSINESS
AND MANAGEMENT
VOLUME 10

WILLIAM D. NELSON

EDITOR

New York


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CONTENTS
Preface
Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

vii

Empirical Analysis of the Status Quo of Global
e-Governance: What Determines the Level of
e-Governance Across Countries?
Bodo Herzog

1

Adaptability and Risk Control Criteria in Managing
Models of an Enterprise
Victoria FitzGerald and Janina White

21

Performance Measurement Systems and
Financial Results of Polish Enterprises:
Multidimensional Analysis
Barbara Batóg, Jacek Batóg, Andrzej Niemiec,
Wanda Skoczylas and Piotr Waśniewski

65

Business Engagement into Economic Development
of the Poorest Countries: The Case of Russia
Yury K. Zaytsev

97

Information Technology Development:
Does Information Technology Need Inspiration
from Swarm Intelligence?

Milena Janakova

113


vi
Chapter 6

Index

Contents
Conflict Resolution Style and Job Satisfaction
of Employees in Nursing
Mateja Lorber

129
153


PREFACE
The authors of this book examine the latest research in business and
management, including the development of e-governance over time and across
countries; the adaptability and risk control criteria in managing models of an
enterprise; the dependences between performance measurement systems
(PMS) and financial results achieved by Polish enterprises; Russian business’
envolvement into the markets of developing countries as a case of private
development engagement; the use of swarm intelligence in the field of
information technology; and job satisfaction of employees in the nursing field.
Chapter 1 - This article studies the development of e-governance over time
and across countries. The authors use a large data sample consisting of 99

developing and 34 OECD countries to study this notion. Firstly, the authors
study the development of e-governance. Secondly, the authors estimate models
to check the determining factors of e-governance over time and across
countries. The study reveals that the level of e-governance is determined by
the degree of e-participation, online access as well as GDP per capita.
Chapter 2 - Recent signs of a recovery in the UK and world economy
along with the liquidity inflow, variety of traditional funding sources and new
entrant lenders enable increased M&A and restructuring activity. At the same
time most managers have employed nowadays various forms of cost-cutting
and a more disciplined spending, so that cost effectiveness is a key. The
expenditures on innovations targeted to improve or to completely transform
existing structures in view of the contemporary and future economy challenges
and enterprises competitiveness must not undermine already achieved wealth
and assets, and also to be effective and provide for possible deviations from
the planned scenario. Preliminary analysis from point of reaching planned
design parameters, as well as of adaptability to a destabilizing influence


viii

William D. Nelson

includes pre-investment project modeling, thus saving excess costs that both
big businesses and SME cannot afford to spend on experimental evidence of
an incorrect development option. Proposed re-investment modeling based on
automatic control apparatus allows to lower unnecessary risk narrowing the
choice of restructuring options and saving costs of the realization of a project.
Chapter 3 - The results of research conducted so far in different countries
confirm that enterprises using performance measurement systems (PMS)
perform better than those that do not. In this chapter the authors tried to

identify the dependences between PMS and financial results achieved by
Polish enterprises. In the study, a dependent variable was constructed on the
basis of financial results for three consecutive years. The application of a
multidimensional analysis (classification trees) in examining the relationships
between the features of performance measurement systems and financial
results of Polish enterprises allows identifying key elements of a performance
measurement system: an ordered system of financial and nonfinancial
measures, the frequency of measuring and complexity of performance
measurement (company as a whole, organizational units and individual
employees level). The research is based on a representative survey carried out
twice, in 2012 and 2014 by using a CATI method on a sample generalized to
the entire population of Polish non-financial enterprises.
Chapter 4 - The role of business in contributing to the overall economic
growth of developing countries cannot be underestimated. Business creates
such economic benefits as employment, taxation base for the state, generates
innovations in technologies and management practicies, provides goods and
services for the population. However there is a growing pressure on business
nowadays, which goes well beyond its contribution to overall economic
growth through trade and investments, which is associated with social and
environment issues. To address this pressure the business became directly
involved in poverty alleviation schemes, environmental, economic and social
regulation activities. This tendency affected the concept of corporate social
responsibility (CSR), which now implies compliance with the social,
economic and environmental commitments at the corporate level and beyond
the corporation. This shift proposes that CSR practicies make the business to
involve the poorest inhabitants of a country both as consumers and as
producers for their economic benefit. Moreover, it suggests that business
models are becoming “inclusive businesses”, “making markets work for the
poor.” This shift is relevant for developing countries, which quite often face
with the challenge of international business activities. To this end greater

emphasis is placed on the economic substance of the CSR, social investments


Preface

ix

and social engagement of the foreign business at the markets of developing
countries. The chapter analyses Russian business’ envolvement into the
markets of developing countries as a case of private development engagement.
Particular focus is made on the expenditures of CSR projects, practices to
engage with the local businesses, as well as the activities associated with
“inclusive business”. The chapter also analyses the factors, explaining the
return on investments for social projects. In conclusion the recommendations
on strengthening the practices of CSR are suggested.
Chapter 5 - This paper is focused on the use of swarm intelligence in the
field of information technology. Information technology (IT) supports the
majority of the realized activities. The press is focused on time and quality.
There are also competitions, customer preferences and downward pressure on
prices and costs. In this situation, new products and services have to address
both existing and new customers. Such innovations actively use information
technology and available information from the Internet. Good and bad advice,
experiences or requests are immediately available for everyone. The behavior
of individuals in a global information society reveals similarities with regard
to the collective behavior of animals in nature. Although this analogy might
seem startling, there is no reason not to make use of experience from nature
for IT development. Swarm intelligence provides inspiration for various fields
such as economics, biology and also computer science. IT product
development is perceived with a wide spectrum of conditions and preferences.
There are verified methodologies, methods or advice in the form of the finest

examples for correct IT implementation. Optimal IT implementation must be
evaluated based on the available IT product, technology issues, data
difficulties, company philosophy, employment approach, motivation, the aims
and concept, management support, end users, the learning process, security of
application, measurement and evaluation. The perception of IT
implementation is a difficult process with a number of relationships. This
volume information is beyond human capacity and a suitable arrangement is
needed. There is an absence of unique methodologies and methods and
therefore, the activation of pheromones is advantageous. Pheromones make
use of ants to support realized activities and collective intelligence. They have
solid results and similar results are brought by these pheromones as indicators
of the actual impact for software development. There are used in a wide
spectrum of suitable dimensions (for a complete view of the existing reality)
and phases (for improved realization of the implementation process step by
step). Based on pheromones (representing the actual impact on the software
project), only the needed dimensions and phases are selected. The needed


x

William D. Nelson

corrections are realized via well-known iteration. The benefit is in the uses of
all available knowledge and information for optimal software development in
a global information society.
Chapter 6 - Conflict has been an integral component of human functioning
throughout history. In nursing often experience conflict not only with other
members of the team but also between the individuals that take care. The aim
of the study was to identify the dominant conflict resolution style and their
effect on job satisfaction of employees in nursing. The authors used the

quantitative methodology, based on a cross-sectional study. The study was
conducted in Slovenian Hospitals at internal medicine and surgery
departments. A structured survey questionnaire was administered. The
relationship between demographic data, conflict resolution style and job
satisfaction were analyzed using descriptive statistics and regression analysis.
Cronbach α was 0.95. The most common style used by nurses to resolve
conflict was collaborating followed avoiding, accommodating, compromising,
and competing. In the research the authors found that collaborating and
compromising positively correlated with teamwork, communication,
emotional intelligence and job satisfaction. Regression analyses indicated that
collaborating conflict resolution style (β =0.212; p=0.004) and compromising
conflict resolution style (β =0.099; p=0.037) influenced on job satisfaction.
This study examined an important aspect of self-knowledge of approaches to
resolving conflict and individuals’ characteristic that is particularly relevant to
nursing professionals. In the study was found that conflict resolution in
nursing associated with the teamwork, communication, emotional intelligence,
work stress and employees' job satisfaction. Health care institutions will be
successful and achieve their organizational objectives, if their employees will
feel well and will be satisfy with their work. Employees with a high level of
job satisfaction are more successful, more committed and more productive.
Therefore, it is important that management focus on integrating conflict
resolution style in nursing.


In: Advances in Business and Management. Vol. 10 ISBN:978-1-53610-132-4
Editor: William D. Nelson
© 2016 Nova Science Publishers, Inc.

Chapter 1

EMPIRICAL ANALYSIS OF THE STATUS QUO
OF GLOBAL E-GOVERNANCE: WHAT
DETERMINES THE LEVEL OF
E-GOVERNANCE ACROSS COUNTRIES?
Bodo Herzog*
ESB Business School, Reutlingen University, Germany
Reutlingen Research Institute, Reutlingen University, Germany
Institute of Finance and Economics, ESB Business School,
Reutlingen University, Germany

ABSTRACT
This article studies the development of e-governance over time and
across countries. We use a large data sample consisting of 99 developing
and 34 OECD countries to study this notion. Firstly, we study the
development of e-governance. Secondly, we estimate models to check the
determining factors of e-governance over time and across countries. The
study reveals that the level of e-governance is determined by the degree
of e-participation, online access as well as GDP per capita.

Keywords: e-governance, development, structure, determinants
*

Corresponding author: Bodo Herzog, ESB Business School, Alteburgstr. 150, D-72762
Reutlingen,
Germany,
Tel.:
+49
7121
271
6031,

Email
addresses:



2

Bodo Herzog

1. INTRODUCTION
The notion of “e-governance” has been relevant since the early 1990s. Egovernance is considered as a broader concept than e-government because it
describes the way that citizens relate to governments. In fact, both notions are
closely linked. The major driver is the new development in the information
and communication technology (ICT), such as the personal computer and
world-wide-web. E-governance (= electronic governance) is defined as a new
style of governance based on new ways of debating and decision-making
through the application of ICT (Carter and Belanger 2005, Edmiston 2003,
Finger and Pécoud 2003, Sipior and Ward 2005, West 2004). This new style of
governance should support and improve both the interaction and transparency
between the citizens and its policy-makers. Therefore, e-governance provides
government service to citizens in a convenient, fast, efficient and transparent
manner. In the end, it is beneficial for both governments and citizens alike.
Today e-governance is more citizen-centric and outward-looking than it
has been in earlier years (Thompson, Rust and Rhoda 2005). Layne and Lee
(2001) even argue that government processes are organized for citizens’
convenience rather than the convenience of government agencies. This view
demonstrates that e-governance enhances both the communication and service
to the public. Consequently, citizens are better informed and public processes
are faster. The government benefits due to increasing efficiency and reduced
administrative costs. However, the increasing availability of e-governance is

used differently across countries and over time. In this regard, my research
elaborates the existing divide and addresses the following questions: what
determines the degree of e-governance? How has e-governance developed in
developing countries in comparison to OECD countries? What are the key
drives of e-governance in countries and over time?
In order to study the determinants of e-governance, I also take a look at eparticipation and broadband subscription. Principally, both e-participation and
broadband subscriptions are prerequisites for efficient e-governance. In
literature, e-participation is defined as a ‘use of information and
communication technologies to broaden and deepen political participation by
enabling citizens to connect with one another and with their elected
representatives’ (Macintosh 2004). Again, e-participation attempts to improve
the processes of involvement through the use of IT, however, it is rather for
communication than service purposes. Consequently, the idea of eparticipation is a part of e-democracy, where the political process is
modernized (Clift 2003). The variable broadband subscription is a simple


Empirical Analysis of the Status Quo of Global e-Governance

3

measure of access to the world-wide-web in general. Both variables, eparticipation and broadband, are the cornerstones of a socially inclusive egovernance.
There are two major results of this article: on the one hand the underling
forces of e-governance are the prerequisites, such as online access and the
willingness of citizens to demand online service. On the other hand the supply
side factors are equally important especially the investments in e-governance
infrastructure. Without sufficient aggregate income and therefore
infrastructure investments in the needed IT, the respective utilization of egovernance is limited and constrained by the supply side. I confirm that OCED
countries have a higher degree in e-governance due to higher GDP and better
online access in comparison to developing economies.
The structure of this article is as follows: Section 2 provides a brief

literature review. In section 3, I study the development of e-governance across
countries and over time using the gathered data. I distinguish between
developing and OECD countries and compute several descriptive statistics. To
study the driving determinants of e-governance, I compute three different
fixed-effects panel regression models in subsection 3.3. Section 4 discusses the
empirical results and draws some policy conclusions. Finally, section 5,
concludes the article.

2. LITERATURE REVIEW
The literature about e-governance and e-government has become more
relevant in the recent decade due to an ongoing trend in the information
revolution. Today almost every country utilizes some kind of e-governance
(Taylor, Miriam and Organ 2007). The past and future development of egovernance is an important research field because it deals with the
enhancement of public and private group interactions.
Early research by Rogers (1995) proposed a diffusion of the innovation
(DOI) approach. This and recent research by Al-Hadidi and Rezgui (2010),
view this approach as an emerging topic in e-governance. Existing studies
provide suggestions based on theoretical models, empirical studies and
explorative case studies. Namely, the current phase of e-governance can be
seen as a transition period. For instance, Norris (2010) demands an even better
feedback process in e-governance in the interest of learning more from users.
In order to get an overview of this field of literature, the paper by Webster and
Watson (2002) is a good foundation.


4

Bodo Herzog

There are many research papers that identify the benefits of e-government

(Irani, Love and Jones 2008, Brown 2007, Choudrie, Ghinea and Weerakkody
2004). Understanding the underlying factors that promote the diffusion of egovernment has become a main research topic in literature. In general, the
research is categorized into three groups: i) technological, ii) organizational
and iii) environmental research. Of course, ICT developments are an essential
part of e-governance and e-government (Ndou 2004, Al-Hadidi and Rezgui).
These technologies have accelerated the exchange of information. However,
the prerequisite requires a stable access to ICT, such as broadband technology
(Faniran and Olaniyan 2009). Organizational factors are also of vital
importance. A determinant that reassures the success of e-governance over
time is the overall organization of a government (Azad et al. 2010, Moon and
Bretschneider 1997). The key factors are the size and structure (Moon and
Norris 2005) and the financial resources (Ferro and Sorrention 2010). Another
impactful element that is not to be underestimated is the influence of
government employees and their skills and knowledge (Al-Busaidy and
Weerakkody 2009). Finally, let me briefly describe that environmental factors
such as culture are also relevant for the development of e-governance (AlAdidi and Rezgui 2010).
The reasons why governments engage in e-governance are focused around
efficiency and transparency through the use of ICT (Codagnone and Wimmer
2007). But the primary intention is broader than this narrow description. It is
about new opportunities and benefits to citizens, businesses and governments
(Jaeger and Thompson 2003, Gupta and Jana 2003, Daniels 2001). Egovernance has the potential to improve the delivery of government
information, service and resources to citizens at all levels – local, regional,
national and supranational (McClure and Jaeger 2008, Helbig, Gil-Garcia and
Ferro 2009).

3. EMPIRICAL DEVELOPMENT OF E-GOVERNANCE
This section provides an empirical study about the development of egovernance over time and across countries. The data sample consists of 99
developing countries and 34 OECD countries over the time period from 2005
to 2015. However, both the e-governance and e-participation data is based on a
survey which took place infrequently in past years. Hence, e-governance data

is limited to the following years: 2005, 2008, 2010, 2012 and 2014. In
subsection 3.2, I study statistical properties and developments of the respective


Empirical Analysis of the Status Quo of Global e-Governance

5

indicators. Thereafter subsection 3.3 provides a more detailed econometric
assessment of the determinants.

3.1. Data
The article utilizes time-series data from 2005 to 2015, consisting of 99
developing countries and 34 OECD countries. The e-governance and eparticipation data is gathered from the United Nations E-Government Survey.
This survey is based on the following principles: i) e-governance is a tool for
effectively promoting social inclusion and economic opportunity for all. ii)
The survey describes the development of each country and highlights the
progress made and the challenges faced. iii) The survey focuses on the
provision of socio-economic and environmental services to the citizens
through ICT, and finally iv) the survey assess the readiness of countries in
respect to the ultimate goal of e-governance, the so-called ‘inclusion of all’.
Similarly, I use the e-participation index (EPI). The EPI is derived as a
sub-index in the E-Government Survey of the United Nations. It extends the
dimension and focuses on the online services that facilitate provision of
information by governments to citizens (“e-information sharing”), interaction
with stakeholders (“e-consultation”), and engagement in decision-making
processes (“e-decision making”) (UN 2014). In addition, I have a long timeseries from 1970 to 2014 about broadband subscription data, real GDP growth,
GPD per capita, and unemployment rates.

3.2. Descriptive Statistics

At first, I study the mean value of e-governance, e-participation and
broadband. In addition, I distinguish between the 99 developing countries and
34 OECD countries in my study. Table 1 represents the mean values. The
mean value of all variables is significantly higher for OECD countries. This is
the first evidence that e-governance is higher and more developed in OECD
countries. Additionally, I find greater values for e-participation and broadband
subscription that indicate that the prerequisites are better developed in OECD
countries.


Bodo Herzog

6

Table 1. Mean Values, 2005 to 2012
Mean

e-Governance

Developing
0.44
Countries
OECD
0.73
Countries
Source: author calculations.

0.15

Broadband

Subscription
2.96

0.48

15.21

e-Participation

Table 2. Standard Deviation, 2005 to 2012
Std. Dev.

e-Governance

Developing
0.52
Countries
OECD
0.11
Countries
Source: author calculations.

0.15

Broadband
Subscription
4.27

0.26

11.90

e-Participation

Additionally, the standard deviation for e-governance reveals that OECD
countries are more homogeneous than developing countries (Table 2).
However, it is surprising that this finding is not the case for the standard
deviation of e-participation and broadband. Here, surprisingly the standard
deviation is lower for developing countries than OECD countries.
To get an impression about the aggregate numbers, I study the
development of these variables over time. Again I distinguish between
developing and OECD countries. Figure 1 represents e-governance, eparticipation and broadband subscription data from 2005 to 2012 for all
developing countries in my sample. The broadband data (green bars) show a
significant upward trend over time. The estimation of a linear regression for
broadband subscription reveals a beta coefficient (slope) of 0.68 with an Rsquared of 0.99.
The same regression does not demonstrate any trend for e-governance or
e-participation data. Hence, I cannot find any development in these data over
time. Finally the comparison of level in Figure 1 with the OECD data in
Figure 2 demonstrates that developing countries have a lower e-governance
level and thus lower respective prerequisites than OECD countries.


Empirical Analysis of the Status Quo of Global e-Governance

7

Source: author calculations.
Figure 1. Developing Countries, Index, 2005 to 2012.

Figure 2 illustrates the same variables for OECD countries. In comparison

to Figure 1 you can immediately see the higher level of e-governance, eparticipation and broadband subscription over time. Similar to data of
developing countries both e-governance and e-participation have no trend over
time, but broadband data is continuously growing year by year.

Source: author calculations.
Figure 2. OECD Countries, Index, 2005 to 2012.


Bodo Herzog

8

Table 3. e-Governance Ranking, 2014
Rank
1
2
3
4
5
6
7

Country
e-Governance
Republic of Korea
0.95
Australia
0.91
Singapore
0.91

France
0.89
Netherlands
0.89
Japan
0.89
United States of
0.87
America
8
United Kingdom
0.87
9
New Zealand
0.86
10
Finland
0.84
11
Canada
0.84
12
Spain
0.84
13
Norway
0.84
14
Sweden
0.82

15
Estonia
0.82
16
Denmark
0.82
17
Israel
0.82
18
Bahrain
0.81
19
Iceland
0.80
20
Austria
0.79
21
Germany
0.79
22
Ireland
0.78
23
Italy
0.76
24
Luxembourg
0.76

25
Belgium
0.76
26
Uruguay
0.74
27
Russian Federation
0.73
28
Kazakhstan
0.73
29
Lithuania
0.73
30
Switzerland
0.73
Source: UN e-governance report, 2014.

e-Participation
1.00
0.94
0.90
0.96
1.00
0.96
0.92
0.96
0.78

0.71
0.82
0.78
0.69
0.61
0.76
0.55
0.86
0.82
0.49
0.63
0.71
0.65
0.78
0.55
0.63
0.98
0.69
0.76
0.65
0.37

OECD
Yes
Yes
No
Yes
Yes
Yes
Yes

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
Yes

Broadband subscription (green bars) is upward trending with a beta
coefficient (slope) of 1.76 and an R-squared of 0.89. Even if the slope is of
1.76 and thus greater for OECD countries than for developing countries with


Empirical Analysis of the Status Quo of Global e-Governance

9

0.68, the overall trend seems to have flattened especially in recent years. The
last conclusion is justified by the results of a polynomial regression that yields
a negative square coefficient of -0.03 and a corresponding higher R-square of
0.99. Thus, there is a slight convergence to a steady state in terms of the
development of broadband in OECD countries.
This evidence is cross-checked with the most recent data from the last egovernance report of 2014 conducted by the United Nations (UN). The report
reveals a world ranking of countries and the change of the ranking positions to
2012. According to the report the leading e-governance countries are The
Republic of Korea, Australia and Singapore (Table 3).
The overwhelming majority of the top thirty e-governance countries are
OCED countries in 2014. This confirms the evidence that OECD countries are
leading in the notion of e-governance in comparison to developing countries.
The data confirms that the changes in the group of OECD countries are
rather small while developing countries sometimes display major movements
up- or downwards. Finally, I compute correlations of e-governance to the
prerequisite measures of e-participation and broadband. Table 4 illustrates a
significant positive correlation of both variables and for all countries. For the
OECD countries the positive correlation is even greater than for developing
countries.

3.3. Regression Model
The conceptual framework of my e-governance model is as follows: I
study the independent variables such as the technical factors measured by
online access and the environmental factors such as the macro-economic
performance. The organizational dimension is not included because it is
almost impossible to quantify.
Table 4. Correlations, 2005 to 2012

Std. Dev.
Developing Countries
OECD Countries
Source: author calculations.

e-Participation
0.57
0.70

Broadband subscription
0.64
0.68


10

Bodo Herzog

This theoretical framework draws upon Davis’s (1989) Technology
Acceptance Model (TAM). Apart from psychological factors the end-user
acceptance of ICT systems is critical. Several studies have utilized this model
as a starting point (Kolsaker and Lee-Kelley 2008, Shareef et al. 2011). Some
studies find significant support of the TAM model dimensions, however,
others do not (Carter and Belanger 2004, Gilbert, Balestrini and Littleboy
2004). I study the determinants of e-governance in comparison to the previous
literature in a more general manner. This is possible due to a newly designed
data sample that covers almost 135 countries and a time period from 1970 to
2012. To find some answers, I estimate several panel regression models. The
so-called fixed effects panel regression has the following form:
𝑒𝐺𝑜𝑣𝑖,𝑡 = 𝑐 + 𝛼 ∗ 𝑒𝑃𝑎𝑟𝑖,𝑡 + 𝛽 ∗ 𝐵𝑟𝑜𝑎𝑑𝑖𝑡, + 𝛾 ∗ 𝐺𝐷𝑃𝑔𝑖𝑡, + 𝛿 ∗ 𝑈𝑛𝑒𝑚𝑝𝑙𝑖,𝑡 + 𝜃 ∗ 𝐺𝐷𝑃𝑝𝐶𝑖,𝑡 + 𝜖𝑖,𝑡

(1)

where the index i is for the respective country and t for time. The respective
variables are e-governance (eGov), e-participation (ePar), Broadband
Subscription (Borad), real GDP growth (GDPg), unemployment (Unempl) and
GDP per capita (GDPpC). The last expression 𝜖𝑖,𝑡 is a standard error term
which is identically, independently and normally distributed. The regression is
specified with country fixed-effects. The regression output of the three
different model specifications is summarized in Table 5.
Table 5 reveals several important findings. In ‘Model I’ both the
dependent variables e-participation and broadband are significant at 1 percent.
Moreover, both coefficients are positive and thus confirm that e-participation
and broadband are important prerequisites for e-governance. The F-test and
adjusted R-square underline that the regression sufficiently explains the
variance of e-governance across countries and time. ‘Model II’ and ‘Model III’
extends the set of independent variables and includes macroeconomic
measures such as GDP growth and unemployment rate. Interestingly,
broadband now gets insignificant but the unemployment rate and GDP per
capita is significant at 1 percent. The coefficient sign shows that richer
countries with higher GDP per capita have higher levels of e-governance. This
result explains the high e-governance level in OECD countries in comparison
to developing economies. The coefficient sign for unemployment is, however,
negative. Naturally this means a lower unemployment rate implies higher egovernance. This evidence falls in-line with the observation that e-governance
is higher in OECD countries due to high GDP growth and lower
unemployment. Hence, this confirms the finding that the e-governance level is
closely related to the macroeconomic performance of countries (UN-Report,


Empirical Analysis of the Status Quo of Global e-Governance

11

p.19, 2014). Overall, e-governance is not only determined by ‘good
governance’ measured by e-participation, but is similarly dependent on the
macroeconomic and financial sources of a country.
Table 5. Panel regression output for e-Governance, 1970 to 2012
Variables
Constant

Broadband
Subscription

Model I
0.45***
(0.006)
0.19***
(0.016)
0.002***
(0.000)

Model II
0.54***
(0.014)
0.20***
(0.019)
0.001
(0.000)

Model III

0.54***
(0.014)
0.21***
(0.018)
0.001
(0.000)

GDP Grwoth

-

-0.002
(0.001)

-0.002
(0.001)

Unemployment

-

GDP per Capita

-

-0.004***
(0.001)
-

-0.004***

(0.001)
0.001***
(0.000)
326
0.94
0.92
37.81
0.00

E-Participation

Observations (N)
476
326
R-squared
0.96
0.94
Adjusted R-squared
0.94
0.91
F-statistic
53.73
36.45
Prob(F-statistic)
0.00
0.00
Source: author calculations.
In brakets the standaed error. The stars indicate the respective significance levels: 1%
= ***, 5% = **, 10% = *.

Table 6. Forecasting of e-Governance, 2005 to 2012
Model I
Model II
Root Mean Squared Error
0.03
0.03
Theil Inequality Coefficient
0.03
0.03
Variance Proportion
0.00
0.02
Covariance Proportion
1.00
0.98
Observations (N)
373
326
Source: authors calculations. Forecast sample: 2008 2012

Model III
0.03
0.03
0.01
0.99
236


12

Bodo Herzog

In a second step, I use the regression results of Model I to Model III and
compute the forecast of e-governance contingent on the model estimates.
Table 6 summarizes the forecasting parameters.
The predictive power of the three models is good. In fact, the root mean
squared error is low and the variance proportion is low as well. This
guarantees that a forecast of the variable e-governance likely remains in a
corridor of the standard deviation. To demonstrate this graphically, I compute
the explicit forecast of e-governance for the United States (US). Figure 3
denotes the e-governance level in blue and the forecast of e-governance in red.
First of all, the red line is close to the blue line in the forecasting horizon.
Second, the forecast remains inside the corridor of two standard deviations on
the up- and downside.
Overall, this confirms that models I to III are sufficient forecasting models
of e-governance. In turn, the major determinants are as I have already
indicated above: (i) the prerequisite variables such as e-participation and
online access and (ii) the economic performance of countries.

Source: authors calculations.
Figure 3. e-Governance Forecast for US.


Empirical Analysis of the Status Quo of Global e-Governance

13

4. DISCUSSION
In this section I draw some policy recommendations based on my
empirical findings. My results suggest that the level of e-governance is driven

by both (i) prerequisite and (ii) economic measures. But these measures are
just one side of the coin, i.e., the supply side. Naturally, a successful
implementation and utilization of e-governance requires the consideration of
the demand side as well. If there is no demand for some kind of “e”-service
there will be no further development. The highest return of e-governance
services will most likely occur if both sides benefits equally. The supply side
represents the government and the demand side the citizens.
A good example is increasing provisions of pubic online-education. This
does not reduce costs for the government and citizens in the first place.
However, it helps to provide better education to everyone, particularly to
remote areas of a country. At the same time, this example illustrates the
challenges and limitations of e-governance services. How can we provide
good online education concerning the individual learning background or
learning curve? What motivational factors can be implemented to overcome an
asocial online learning experience? What about privacy and security issues?
The last question is probably most relevant in health care issues.
Nevertheless, the further development of e-governance requires a
strengthening of the prerequisites at first, such as online access. This is a key
finding in my study and a recommendation of the UN e-governance Report
(2014). Furthermore, the government has to implement e-governance services
together with feedback tools. Feedback is essential to get more information
about problems and users. This demand side information may reveal
challenges but assists with prioritizing in future developments. All the
information and data is a strategic asset but it must be guaranteed that it is only
to the benefit of citizens and not detrimental or even harmful to users.
Using government data is fundamental for efficient processes in particular
if resources are scarce due to limited tax-payers money. The economic and
social effects of e-governance are far reaching because they have the potential
to improve the efficiency, productivity, economic growth, transparency as well
as an accountability of countries. Better knowledge about the demand of

citizens may also lead, according to the theory of fiscal federalism, to better
government decision-making (Oates 1972, 1985, 2005). There is no doubt the
closer policy is to the citizens the better they will know the needs of peoples.
Thus via e-governance the government has the opportunity to proactively
shape its policies into a better future.