An Analysis of e-Governance and Its Impact on the Profitability of MSMEs: A Structural Equation Modelling Approach

Abstract

The article studies e-governance and its impact on the performance of MSMEs in India using a structural model. The model contains three main variables: use of e-governance by the MSMEs, the benefits attained by using e-governance (a mediating variable), and the change in performance due to the use of e-governance and benefits attained. The profitability of the firm is a measure of performance in the study. The study was done in collaboration with PHD Chamber of Commerce and Industry, Dehradun, Uttarakhand, India. The data was collected using the survey method, in which a close-ended questionnaire was circulated to the top executives of MSMEs. Out of 3,126 registered MSMEs (registered during FY 2017–2018), 350 random samples were taken into consideration for this study. A response rate of 83.7% was attained. Statistical techniques such as EFA, CFA and SEM have been used in this study to confirm the model, using SPSS and AMOS software. The model proposed in the study fits well both theoretically and empirically in the Indian context, and clearly shows the significant impact of e-governance use on the business performance of MSMEs. The study also shows that the benefits of e-governance have a partial mediating impact on the relationship between e-governance and the profitability of the business. The structured model presented in the study would be useful for practitioners (government bodies, government officials and e-government practitioners) in making vital decisions while designing an effective e-government structure for enterprises.

Developing Islamic financial literacy in improving Islamic financial behavior towards the financial well-being of MSMEs: The moderating effect of e-payment usage

“…According to Andarsari & Ningtyas (2019), if MSMES have wise financial behavior, this can support their business to grow every year. MSMEs have a significant impact on business leading to profitable institutions (Vashist et al, 2021).…”

Analisis Pengaruh Pembiayaan, Skala Usaha, dan Ketersediaan Sumber Daya Manusia terhadap Profitabilitas UMKM

“…E-governance adalah faktor lain yang dapat mempengaruhi profitabilitas UMKM. Sebuah penelitian di India menemukan bahwa penggunaan e-governance memiliki dampak yang signifikan terhadap kinerja bisnis UMKM, dan manfaat dari e-governance memiliki dampak mediasi parsial terhadap hubungan antara e-governance dan profitabilitas bisnis (Singh et al, 2023;Vashist et al, 2021). Kesimpulannya, UMKM menghadapi berbagai tantangan, termasuk terbatasnya akses pendanaan, rendahnya tingkat pendidikan dan keahlian, kesulitan dalam memperoleh perizinan, kurangnya akses modal, dan kurangnya dukungan infrastruktur.…”

“…Hasil penelitian ini menunjukkan bukti bahwa ketiga variabel penelitian memberikan pengaruh signifikan terhadap profitabilitas UMKM, Selaras dengan penelitian sebelumnya, UMKM membutuhkan pembiayaan untuk memulai, mengoperasikan, dan mengembangkan bisnis mereka. Kurangnya pembiayaan dapat membatasi kemampuan mereka untuk berinvestasi pada peralatan, teknologi, atau pemasaran baru, yang dapat mempengaruhi daya saing dan profitabilitas mereka (Erawati et al, 2022;Priyana & Surjandari, 2022;Ramadhani et al, 2019;Vashist et al, 2021;zahrah Buyong, 2020).…”