The business value of egovernment for small firms

Purpose To propose and test a model about the business value of government electronic services egovernment to small firms. Two dimensions of egovernment use searchoriented and transactionoriented are measured and the effects of three types of egovernment benefits on small firms' profitability are tested. Designmethodologyapproach 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 egovernment services. Searchoriented use of egovernment is positively related to enhanced intelligence generation, new business development, and time savings. The relationship between use of egovernment and profitability is mediated by firms' intelligence generation. Research limitationsimplications The study uses selfreported 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 egovernment as an information source to enhance their market intelligence and build revenues. IT suppliers should emphasize egovernment services that link small firms to customers and collaborators, and facilitate access to key information resources. Government agencies should enhance their egovernment information services to improve small business performance and increase tax receipts. Originalityvalue The paper provides empirical evidence about the positive effect of use of egovernment services on the financial performance of small firms.