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« Disseration Chapter 3 - The Economic Implications of Information Technology in E-Governance: A System Thinking/System Dynamics Approach | Main | Financial Accounting »


Disseration Chapter 2 - The Economic Implications of Information Technology in E-Governance: A System Thinking/System Dynamics Approach

CHAPTER 2: Literature Review


2.1 Background

            Good governance is important in the different aspect of government. Governments are considered as specialized institutions that contribute to governance (Riley 2003). Representative governments seek and receive the support of the people, but they also need the active cooperation and service of the public servants. Thus, it is important to focus on the different perspectives and demands of the public. Like the private sector, the government is also being affected by different changes in the environment, particularly the application and invention of different technologies, such as IT and the Internet. As a result of the growing demands of the public and the needs to connect the different processes inside the out of the government agencies and departments, IT has been applied in government which is known as e-government.

            E-governance or electronic governance has evolved as the information-age model of governance which seeks to realize the different processes as well as structures of tying together the different potentialities of information and communication technologies or ICTs at the different levels of government as well as the public sector and beyond, in order to enhance good governance (Holmes 2001). It is important to consider that there are important layers involved in the e-government architecture framework, which include: access layer, e-government layer, e-business layer, and infrastructure layer (Ebrahim & Irani 2005) (Figure 1).  

Figure  ESQ. Figure \* ARABIC 1 E-Government Architecture Framework

Source: (Ebrahim & Irani 2005)


            This framework enables to send and offer government data as a source, using different processes and procedures such as management support, basic data system and office automation via different channels such as the Web (Intranet and Extranet) and e-mail, with the use of different hardware and services such as mobile phones, digital TV, computers, call centers, kiosks, and tele-conferencing towards the recipient of the government services which include the citizens, business sector, public officers, non-government organizations and other connected entities ( n.d.). Figure 2 shows the said model of e-commerce.


Figure  ESQ. Figure \* ARABIC 2 E-Commerce Model

Source: (

            Riley (2001) defined e-governance as the commitment to make use of appropriate technologies in order to improve the different governmental relationships, both in the internal and external aspect, to advance the democratic expression, human dignity and autonomy, support the different economic development and support the fair and effective delivery of different services.

Excellence in organizations has been perceived to have the following attributes (Emerson and Harvey, 1996):

  • purpose-driven (i.e. goal-centric);
  • customer (i.e. citizen)-centric;
  • process-oriented; and
  • structure-supported.

To some extent this is confirmed by the definition of “e-government” used by the Ministry of Labor and Government Administration (1999), which defined the excellence in governance in terms of fulfillment of different goals, shown in table 1.


Table  ESQ. Table \* ARABIC 1 Goals of E-Governance



Efficient and result-oriented administration

Government administration shall, to the greatest extent possible, achieve “results” in accordance with stipulated goals, and these goals shall be attained without any unnecessary use of resources. Thus, excellence involves goal-centricity or is purpose-driven.

Provide user (citizen) oriented administration

Government administration should acquaint itself with the needs and desires of the users (citizens), and adapt its way of working whenever possible in accordance with their desires.

Open and democratic administration under the rule of law

Government administration under the rule of law shall contribute to ensuring predictability and equal treatment, and emphasizing openness and the right of access to information or decision-making in government activities. This statement again ensures that in addition to being purpose-driven, this purpose itself should be governance-centricity to have excellence.

Politically manageable administration.

Government administration shall be an adaptable and flexible tool for implementing Government's policies. Though not explicitly, but this statement attempts to ensure that the processes and the structure of government (which constitute “administration”) should support implementation of Government's policies, i.e. should be “outcome-driven”.


(source: Ministry of Labor and Government Administration 1999)

Thus, excellence in e-governance is characterized by exploitation of governance processes, structure and technology to provide an administration, which is efficient, effective (outcome-driven), politically manageable, and open and democratic (governance-centricity). This is essentially what we have called as “governance-centric” e-governance.

However, e-governance is much more than just the act of automation (computerization) itself (Saxena, 1995). It implies major socio-economic innovations and politico-administrative changes based on new ICT applications and developments. Thus, to become a meaningful agent of modernization for public service delivery and modern governance, e-governance must abandon its technological bias and focus on socio-cultural transformations (Leitner, 2003). This is a crucial distinction. While an e-government is an automated government, the reverse does not inevitably hold true.

Introduction of automation into the public sector will not automatically create better or more open governance unless it is based on open and democratising principles. ICTs have transformational potential when they are applied to appropriate and specific goals of governance. This transformational potential of ICTs springs from their capabilities to promote active and non-hierarchical information exchange. Unfortunately, divorced from specific and articulated goals, ICTs will not bring about the benefits of e-governance that are so often touted, such as democratization, efficiency and the transformation of how government works. Inappropriately applied, in fact, ICTs can become a weapon for having a dampening effect on citizenship and democracy. This risk in the techno-centric view of e-governance is inherent because use of ICTs is merely a necessary condition for providing good governance, not a sufficient one (Madon, 1994).

Thus, away from techno-centricity, the other view of e-governance is “governance-centric” (or citizen-centric). Such a view of e-governance focuses more on the outcome or impact of e-governance, rather than merely on its outputs. Or, in other words, the governance-centric view of e-governance focuses more on its effectiveness rather than its efficiency alone.

Thus, a governance-centric (or citizen-centric) view may assume that quality for government services is different because either they are universal (e.g. payment of tax) or they are provided to specific eligible groups (e.g. the unemployed). Therefore, this view has to focus on the capacity of government to serve the needs of diverse groups, including the aged, those with disabilities, those with few or inadequate resources (such as technology access, knowledge of a language such as English, etc.), and those in rural and remote areas (Teicher et al., 2002).

2.2 Implications of IT on E-Governance

2.2.1 Political Implications of IT on E-Governance

            Application of IT on government process helps to focus on good governance practices including managerialism, accountability, transparency and freedom of information, rule of law and combating corruption (Wescott 2007). Furthermore, IT enables to modernize the processes by enabling more precise, 27/7 responses to citizen requests and connecting transaction accounts in different departments, which help in order to reduce costs and allow the harvest of data from different system, therefore boosting the quality of feedback to managers and policy makers (Dutton 1996). The study of Heeks (2001) shows examples across the different jurisdictions and bureaucratic cultures of the same, managerial reforms supported by IT – the result showed that IT helped to improve the effectiveness and efficiency of different processes and transactions including the personnel management, procurement, accounting, health care and unemployment benefits (Wescott 2007).

            On the other hand, IT also affects the outcomes of policy, higher quality of services and the greater participation of the citizen (OECD 2004 cited in Wescott 2007). The generic policy and institutional reforms can be affected because it helps to improve the interactions and connections of the government with the citizens, businesses, employees as well as the different intra- and inter-government agencies and departments. According to Sins (2003), IT can affect government processes by two levels – internal and external to the government. Internal: It can help to reinforce the pre-conditions of reform and action by the improvement of sharing of information, internal communication and alignment of organization, connection with employees and training. External: IT can help to improve service delivery and development by changing the current government processes in order to perform more efficiently and effectively.

            Different literatures and researches claim that IT can help to improve the efficiency of administration by improving the organizational structure and processes. (e.g Heeks, 2001; Fountain, 2001; OECD, 2003; Kim, 2004). Kim suggested that it can be considered as a strong channel for change of organization and smooth the progress of reengineering process as well as integrated services towards the citizens. As a result, business process management become more silent in operation, thus the bureaucracy becomes more centered towards the citizen. The application of Internet help to accumulate savings on the data collection, transformation and transmission, exchange of information and communication with the customers which motivates efficiency in the mass processing of tasks and public administration activities (OECD 2003 cited in Wescott 2007). In addition, Because IT helps to improve the capability to examine, develop and put into practice the strategy and policy that lead the government process by linking the arms, agencies, levels as well as databases of the organizations of government, it can also lead to possibility of the improvement of the internal operations of the government by creation of the strategic relationship within the government, at the same time, establishing empowerment (OECD 2003 cited in Wescott 2007). Thus, within the local government, IT has the possibility to improve the speed and efficiency of the internal local authority processes by enabling the local authorities to rethink and develop the way the agency works and performs (Birch 2003). Consequently, it can help to make the move of power easier, authority and resources for process from the different levels of the government, which enables to improve the quality of public service delivery because it helps the governments to be seen as a unified organization and offer vast services (OECD 2003 cited in Wescott 2007).

            IT can also help in order to motivates continuous reform process in different areas by the improvement of transparency, openness, facilitation of information sharing, focusing on internal inconsistencies, renewal of interest for public sector reform agenda as well as the increase of pressure towards the reform by promising improvement of services (Torres & Pina 2005). With this, IT can help in order to get rid of the carefulness from the equation promoting corruption by dis-intermediating services and enabling the citizens to carry out transactions themselves (Singh & Naz 2010). Thus, it is visualized that in this kind of setting, with many individuals and possible witnesses, corruption will be harder, if not impossible to consign (Mahmood 2004). In different Latin American and Indian authorities, IT helped to cut minor corruption (Bhatnagar 2003). The most well-known and award winning example is the application of Online Procedures Enhancement (OPEN) system in Seoul, Korea (Choi & Choi 2004). According to Talero (2005) the application IT can help in order to promote the anti-corruption fight in opposition to the self-serving asset stripping by state officials. Furthermore, it also plays a vital role in the preclusion of some types of imposing political corruption (Prahalad 2005).

            Above all, because IT enables to connect all of the agencies and stakeholders of the government, which include the citizens, it can help in order to advance democracy. By offering the citizens with the information regarding the different activities within the public sector, improving the input of the citizens in the public governance can help to improve the connection between the government and the citizens (Heek 2001). This can be observed in countries including mass political actions in Thailand (1992), Indonesia (1998) and the Philippines (2000) and non-democratic country such as Hong Kong (1990s) (Cheung 1996).

            However, it is also important to focus on some of the important issues regarding the relationship of IT and e-governance. First, there are different legislative and regulatory barriers as well as budgetary restrictions, together with the knowledge and readiness of the government for application of IT. This includes the restraining data sharing and collaboration between the agencies of the government as well as the inflicting of excessive privacy and security measures (OECD 2003). The study of Moon (2002) showed that the lack of capacity of individual and legal issues, as well as the financial and technical constraints can affect IT and e-governance.

2.2.2 Social Implications of IT on E-Governance

            IT can help to improve the quality of service being offered by the government. This enables a process or transactions that are customer-focus which pertains on the developing government services based on the demand and value of the citizens (Kim 2009). In connection with the political implications of IT on e-governance, due to the improvement of the internal processes being implemented inside the government and between the different agencies, departments and groups, the result will focus on the improvement of the internal efficiency which will help to improve the satisfaction of the citizen (Marche & McNiven 2003). Because of the electronic links, citizens will be able to connect to the government and get information about the different aspects of the government (Singh & Pathak 2010). Thus, with the help of IT, the voice of the citizens or the people will be heard in effective and efficient manner, which can be helpful in the process of decision-making regarding the different programs and policies to be implemented by the local and national government. Therefore, it can help in order to improve the quality of lives of the people because of the information coming from the citizens.

            On the other hand, the study of Margetts & Dunleavy (2002) presented details regarding the cultural aspects related with the application of IT in government processes from the supply side (government) and demand side (citizens). On the supply side, the factors to considered as the organizational cultures, values, lack of demand of the organization and the rivalry in channel. On the other hand, the important factors in the demand side are the social exclusion, domestication, government’s low expectations, disparity between the use of the government and the society and the transaction costs.

            In connection, it is important to focus on the digital divide or the difference in the number of the telephones, Internet users or computes per head between the rich and poor places (Mutula 2006). Even though, there were studies which shows that global digital divide is shrinking (Kenny & Fink 2005) – rich countries were in front, but the poor countries were also catching up very fast – it is important to focus on the digital divides within in the country or between the rural and urban places. According to Nua (2002), countries with the thriving economies are by and large connected with the increased access towards IT than those whose economies are doing badly. Thus, it can affect how nations will be able to implement IT in government processes in the entire nation. Therefore, it can create an inequality between the citizens from different parts of the nation, because there are some, with no access to technology, who will not be able to take advantage of the e-governance.

2.2.3 Technological Implications of IT on E-Governance

            Technology plays a vital role on the e-governance. This is because of the fact that IT, particularly Internet enables to create a channel of communication or flow of data which enables the stakeholders including the employees of the government, non-government organization, private sector and citizens to access or retrieve information regarding the different transactions and processes in the government. With that, according to Stowers (2001) the use of IT, particularly the Internet help to enhance the access to and the delivery of the government information and services to the citizens, business partners, employees, other agencies as well as government entities. As have mentioned in the political implications, the application of technology enables to create both democracy and transparency, which will help in order to maintain the ethical consideration inside the government. Therefore, it enables the government to deliver public services in efficient and effective manner, thus help in order to ensure that the citizens are receiving high quality of services and programs from the government.

            However, IT can also affect on how effective e-governance is. This pertains on how the knowledge of the employees and the citizens regarding the application of the IT, at the same time, pertains on the accessibility of technology within the country. It is important to consider that in order take advantage of the entire benefits of e-governance, technological bias must be prevented. Different researchers also focus on the implications of the issues regarding privacy and confidentiality. Because all of the processes and transactions are connected to a single system, and using the Internet or online system, it is prone to different technological threats including hacking and DoS or denial of service, which can greatly affect the overall performance of the online government processing. Furthermore, sharing information with the use of intranets and connection with the other government institution may cause threats towards the hierarchies of the local government employees. With this, some of the employees may feel threatened when the new web technologies are introduced, therefore, it will create a resistance to change, which will affect the productivity of the employees (Margetts & Dunleavy 2002).

2.2.4 Economic Implications of IT on E-Governance

            In the economic aspect, IT can greatly affect the processes inside and out the government. One of the important influences of IT is the savings which can be acquired by using IT, particularly the Internet by integrating the overall system. Application of IT can help to reduce the cost to be spent in the process of handling and processing data and information from different parts of the government agencies, particularly those that are related with the process of handling people. Because the Internet enables to cater the people 24 hrs a day, therefore, additional human resource will no longer be needed in order to offer high quality of services towards the citizens and other stakeholders of the system (Heeks 2001). However, there are also some authors who focus on the negative influence of application of IT, particularly regarding the cost of the initial set up or installation of the system. This is important because one of the primary problems in the application of IT in the government is the lack of budget (Dutton 1996). This can be observed in the different developing countries, where in they are lacking of the budget or the fund which can be spent in the process of updating the overall process of the government.

            On the other hand, because IT enables to create transparency and democracy, it can help in order to lessen or prevent corruption. Corruption is very important problem to be faced by any government in the world, because it can affect the overall spending towards programs and projects to be implemented (Heeks 2001). By combating corruption, the government can help to save money, at the same time, ensure that all of the resources and support will be allocated to the person, organization or project the same as what the plan or the proposition stated. By fighting the corruption, it can help in order to build and maintain trust and good relationship between the government and the citizens (Kim 2004).  This good relationship can greatly affect on how the government will maintain its link or connection with the citizens.

            However, it is also important to focus on the impact of the differences among the economic conditions of people in a particular place. One of the important aspects of governance is to ensure that each and every individual in the country is receiving the same and fair services from the government. With this, it is important to consider the digital divide, which pertains on the difference of the people or group in terms of accessing towards technology.

2.3 Review of Systems Thinking

            In order to come up with the information related to systems thinking, the author focuses on reviewing 5 articles about systems thinking, which the author believe to be helpful in conducting this study. These articles are by Aronson (n.d.), Ackoff (n.d.), Richmond (1993), Jones (2009), Zexian & Xuhui (2003)

2.3.1 Overview of Systems Thinking (Aronson, n.d.)

                Aronson presented different background information about systems thinking, particularly that information that is related with the history of ST, which includes the founder of the ST as a field of system dynamics. According to Aronson, the main difference between ST and the traditional analysis lies on the entire process of analyzing the problem or situation. In the traditional manner, the analysis is done by separating every piece of what is being studied. On the other hand, in ST, analysis focus on how the thing or situation being studied connects or interacts with the other parts of the system or the set of elements which interact in order to create behavior, of which it is as part. As a result, instead of isolating smaller and smaller parts of the system being scrutinized and analyzed, ST works by broadening its view in order to take into account larger and larger numbers of connections and relationships as an issue is being analyzed and scrutinized, which commonly result in different conclusions than those done by traditional analysis (Aronson n.d.).

2.3.2 Systems Thinking: Critical Thinking Skills for 1990s and Beyond (Richmond 1993)

            According to Richmond (1993), the world today is experiencing problems related with the problems being faced in the world by applying unilateral solutions, such as tightening of the web of interdependencies and the capacity in thinking of dynamic interdependencies being unmatched. As a result, as the gap between the nature of the problems and the ability to understand grows, the world is facing increasing problems from different sources. Regarding this, ST and system dynamics are considered as vital factors in the process of developing different effective and efficient strategies in closing the gap.  

2.3.3 A Revolution in the Field of Systems Thinking – A Review of Checkland’s Thinking (Yan & Xuhui 2010)

Yan & Xuhui (2010) discussed the three important paradigm shifts of the systems thinking based on the view of the system movement. These three shifts include: general system thinking to applied systems thinking; Hard System Thinking (HST) to Soft System Thinking (ST); and social paradigm of applied system thinking from functionalism to interpretative tradition in dealing with human affairs. In the study of Yan & Xuhui (2010), the said three shifts were considered in assigning Checkland’s ST to 4 vital models, which include: the human activity system, the purposeful holon, the learning system and two pairs of system concepts, which point ST as an important highlight in the history of the system movement.

The study enables to disapproved of the philosophical attitude of extreme subjectivism of ST. This is because the author believes that functionalism approach, which is based and dependent on positivism and the interpretive diagram, which is based on the phenomenology are matching rather than equally exclusive in dealing with the difficulty and complicatedness of the reality in the social world. Furthermore, it also enables to focus on the issues related with the development and movement of ST after 1970’s, at the same time, shows that SST must be extended into three vital pairs of system concepts by the process of supplying self-organizations and adaptive evolution as the third pair of the systems concepts (Yan & Xuhui 2010).

2.3.4 Learning the Lessons of Systems Thinking: Exploring the Gap between Thinking and Leadership (Jones 2009)

            According to Jones (2009) ST has a connection and impact towards leadership inside the organization. The study enables to show the different impact of the environment towards the implementation of ST inside the organization, particularly in the process of handling the people or the human resource of an organization in order to achieve the organizational goals and objectives. Due to the different challenges and risks being faced by different organizations in the business field, it is vital for leaders to focus on the establishments and development of their own localized toolkits of ST which will met their needs, demands and preferences. This can be done by first, constructing the collaborative processes which will lead to the tangible practices of establishing and reflecting process in order to make the people be aware of the available options and futures.

2.3.4 Why Few Organizations Adopt Systems Thinking (Ackoff n.d.)

            ST has been a favorite topic in management and decision making in different fields. However, according to Ackoff, the main reason why few organizations and managers adopt ST is because there are few literatures and lectures which address the possible users. Thus, most of managers and decision makers inside organizations are not that exposed and familiar with the actual application and use of ST inside the organization, this is even though, there are have been many theories which tackle the importance and advantage of ST. Therefore, it is important for future studies and literatures to focus on how to make ST understandable and useful for non-technical people.




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