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.