The business value of e‐government for small firms

Abstract

Purpose – To propose and test a model about the business value of government electronic services (e-government) to small firms. Two dimensions of e-government use (search-oriented and transaction-oriented) are measured and the effects of three types of e-government benefits on small firms' profitability are tested. Design/methodology/approach – Survey of 100 small firms in three states of the USA (Maryland, New York, and Washington). Findings – Small firms' information technology capabilities are positively associated with the use of e-government services. Search-oriented use of e-government is positively related to enhanced intelligence generation, new business development, and time savings. The relationship between use of e-government and profitability is mediated by firms' intelligence generation. Research limitations/implications – The study uses self-reported data and was based on a sample of firms from three states of the USA. Thus results are limited by the specificity of this geographic context. Practical implications – Small firms should use e-government as an information source to enhance their market intelligence and build revenues. IT suppliers should emphasize e-government services that link small firms to customers and collaborators, and facilitate access to key information resources. Government agencies should enhance their e-government information services to improve small business performance and increase tax receipts. Originality/value – The paper provides empirical evidence about the positive effect of use of e-government services on the financial performance of small firms.