Consolidation of the activities of regulatory institutions while implementing e-government solutions

Davidavičienė, Vida; Raudeliūnienė, Jurgita; Vengrienė, Elena; Jakubavičius, Artūras Article Consolidation of the activities of regulatory institutions while implementing e-government solutions Journal of Business Economics and Management (JBEM) Provided in Cooperation with: Vilnius Gediminas Technical University (VILNIUS TECH) Suggested Citation: Davidavičienė, Vida; Raudeliūnienė, Jurgita; Vengrienė, Elena; Jakubavičius, Artūras (2018) : Consolidation of the activities of regulatory institutions while implementing egovernment solutions, Journal of Business Economics and Management (JBEM), ISSN 2029-4433, Vilnius Gediminas Technical University, Vilnius, Vol. 19, Iss. 2, pp. 307-322, https://doi.org/10.3846/jbem.2018.5534 This Version is available at: https://hdl.handle.net/10419/317288 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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Published by VGTU Press *Corresponding author. E-mail: jurgita.raudeliun[email protected] This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons. org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Journal of Business Economics and Management ISSN 1611-1699 / eISSN 2029-4433 2018 Volume 19 Issue 2: 307–322 https://doi.org/10.3846/jbem.2018.5534 CONSOLIDATION OF THE ACTIVITIES OF REGULATORY INSTITUTIONS WHILE IMPLEMENTING E-GOVERNMENT SOLUTIONS Vida DAVIDAVIČIENĖ , Jurgita RAUDELIŪNIENĖ*, Elena VENGRIENĖ, Artūras JAKUBAVIČIUS Department of Business Technologies and Entrepreneurship, Vilnius Gediminas Technical University, Vilnius, Lithuania Received 09 May 2018; accepted 30 August 2018 Abstract. In the context of globalization, information technology development and transformation not only the needs of the society are changing, structural changes are taking place in the management of the activities of the regulatory institutions as well, because their main function is to meet the changing needs of society. While this process is happening, it becomes difficult to balance activities of the regulatory institutions with the needs of the society and business. This is why optimization of the regulatory institutions functions is one the European Union᾽s priorities. One of the most efficient ways to increase the quality of public services, reduce expenses, encourage cooperation between institutions and make decision making process more efficiently is to create an evaluation system that allows assessment of the efficiency of the consolidation of regulatory institutions functions during the implementation of e-government. In order to solve issues, the analysis of scientific literature, multiple criteria and expert evaluation were applied. The proposed system for evaluation of the consolidation of the activities of the regulatory institutions while implementing solutions of e-government allows complete assessment of the factors and criteria, identification of drawbacks of the process and also enables to create decisions for solutions of the problems. Keywords: activities of regulatory institutions, consolidation, e-government, evaluation. JEL Classification: M00, M1, M15. Introduction In the context of globalization and transformation an all-encompassing approach to the activities of regulatory institutions and to the implementation of information technologies is necessary, with emphasis on the new tendencies and decisions oriented toward balancing the needs of the regulatory institutions, society and business in the field of regulation. In this research for the solution of this type of issues we propose concentrating on the regulatory 308 V. Davidavičienė et al. Consolidation of the activities of regulatory institutions while implementing... institutions᾽ consolidation aspect, in this research it is defined as uniting regulatory institutions for common goals in order to work beneficially for the society and business entities. Problems that regulatory institutions face when implementing e-government solutions are analyzed by many researchers (Baldwin & Black, 2008, 2016; Baldwin, Black, & O’Leary, 2014; Blanc, 2013; Blendinger & Michalski, 2018; Carroll & Head, 2010; Cheng, 2014; Choudrie, Zamani, Umeoji, & Emmanuel, 2017; Christiansson, Axelsson, & Melin, 2015; Cledou, Estevez, & Soares Barbosa, 2018; Gil-Garcia, 2012; Hampton, 2005; Juell-Skielse, Lönn, & Päivärinta, 2017; Layfield, 2014; Luna-Reyes, Picazo-Vela, Luna, & Gil-Garcia, 2016; Maegli & Jaag, 2013; Maegli, Jaag, Koller, & Trinkner, 2011; Maume, 2013; Miyazaki, 2018a, 2018b), who address such aspects as the needs of the society and business enterprises and the challenges and possibilities of meeting those needs, innovations of information systems and technologies, their implementations and impact on increasing e-government᾽s efficiency, regulatory reforms and processes, the best regulatory practices and possibilities to apply them. Researchers pay quite a lot of attention to the analysis of the methods of evaluation of the public sector institutions᾽ efficiency, however, there is not enough of all-encompassing scientific research and solutions regarding the assessment of the regulatory institutions᾽ consolidation while implementing e-government solutions. Therefore the issue of the assessment of the regulatory institutions᾽ consolidation while implementing e-government solutions remains topical from both scientific and practical point of view with the non-certainty aspect that exists in the dynamic environment, when it is particularly important to create wellgrounded solutions in order to increase functions᾽ efficiency. In order to solve the issues mentioned above the purpose of the research was formulated: to come up with an evaluation system that would allow assessment of the efficiency of the consolidation of regulatory institutions’ activities while implementing e-government solutions. In order to fulfill the purpose, the following methods were applied: literature analysis, multiple criteria evaluation and expert evaluation (structured survey). The proposed evaluation system was prepared using the AHP method, hierarchic classification, calculation of the particular value (Eigenvalue), compatibility index and others. The research data was processed using the SCB tool for the evaluation of the AHP method, when it was applied for approbation of evaluations of two experts of different levels. The proposed system for evaluation of the efficiency of the consolidation of regulatory institutions’ activities while implementing e-government solutions allows us to see how important particular factors are in every case analyzed, to assess the pros and cons, create a number of solutions for the problems identified and to increase the efficiency of the regulatory institutions’ activities. To verify the evaluation system an expert research was carried out, it was based on the hierarchical classification of factors, during the research institutions operating in Lithuania and supposition regarding their consolidation were analyzed and an experiment was conducted. 1. Literature review In order to assess the efficiency of the factors that influence the consolidation of regulatory institutions’ activities while implementing e-government solutions, analysis of scientific Journal of Business Economics and Management, 2018, 19(2): 307–322 309 literature was conducted, as well as analysis of the environment of the regulatory institutions operating in Lithuania and in the European Union and analysis of the Lithuanian case of institutions that provide care, moreover, 35 primary evaluation factors were identified: cooperation, legal base optimization, accountability, purposefulness, efficiency of the regulatory means, institutions᾽ annual budget, salaries and consultancy fees, number of employees, number of active subjects in the public sector, consolidation of institutions, function consolidation, coordination expenses, information consistency, segment, e-segment, frequency of the service use, service costs, maintenance work informational systems, document management systems, specific systems not related to maintenance, work automatization systems, permits and licenses accounting systems, electronic services systems, operational information management, knowledge-based information system, risk evaluation and management information, time, trust, consultancy, competitiveness, administrative expenses, adaptability of operations to regulatory changes, consultation, training and certification expenses, register management information systems stipulated by law, and laboratory research administration system (Alcaide-Muñoz, Rodríguez-Bolívar, Cobo, & Herrera-Viedma, 2017; Anthopoulos, Reddick, Giannakidou, & Mavridis, 2016; Baldwin & Black, 2008, 2016; Baldwin et al., 2014; Benz & Eberlein, 1999; Blockmans, Hoevenaars, Schout, & Wiersma, 2014; Boer, Arendsen,& Pieterson, 2016; Boer, Pieterson, Arendsen, & Dijk, 2017; Choi, Park, & Rho, 2017; Foremny, Sacchi, & Salotti, 2017; González, Perelman, & Trujillo, 2009; Hampton, 2005; Janssen & Voort, 2016; Kersbergen & Waarden, 2004; Klievink, Bharosa, & Tan, 2016; Larsson& Grönlund, 2016; Mohan & Parthasarathy, 2016; Mueller, 2003; Navarro-Galera, Alcaraz-Quiles, & Ortiz-Rodríguez, 2016; Scupola & Zanfei, 2016). The main factors that influence the model of the consolidation of regulatory institutions’ activities while implementing e-government solutions are separated into two levels: the regulatory institutions level and the business entities level. The factors of the regulatory institutions level, as well as the factors of the business entities᾽ level fall into four groups according to the spheres of influence of those factors: regulatory processes, expenses, electronic services provision and information and communication means᾽ evaluation levels (AlcaideMuñoz etal., 2017; Anthopoulos et al., 2016; Baldwin & Black, 2008, 2016; Baldwin et al., 2014; Benz& Eberlein, 1999; Blockmans et al., 2014; Boer et al., 2016, 2017; Cheng, 2014; Choi et al., 2017; Choudrie et al., 2017; Christiansson et al., 2015; González et al., 2009; Hampton, 2005; Janssen & Voort, 2016; Juell-Skielse et al., 2017; Kersbergen & Waarden, 2004; Klievink et al., 2016; Larsson & Grönlund, 2016; Luna-Reyes et al., 2016; Mohan & Parthasarathy, 2016; Mueller, 2003; Navarro-Galera et al., 2016; Scupola & Zanfei, 2016). The first group is the regulatory processes group that encompasses the factors related to the regulatory processes and exercise influence on the regulatory activities. The second group of factors is the expenses group that encompasses factors related to the expenses of the regulatory process and the expenses obtained by business entities. The third group is the group of factors that define the provision of electronic services. The fourth group of factors is the group of information and communications technology tools that are employed to improve the regulatory process. In the group of regulatory factors it is demonstrated which factors of the regulatory institutions᾽ level have an influence on the subjects of the business entities level. Majority of 310 V. Davidavičienė et al. Consolidation of the activities of regulatory institutions while implementing... the factors that influence the efficiency of the regulatory institutions are directly related to the needs of business entities (Table 1). Table 1. Regulation process factors (created by the authors) Factor L2R.1. Time L2R.2. Trust L2R.3. Consultation L2R.4. Competitiveness L2R.5. Optimization of the legal base L2R.6. Purposefulness L1R.1. Cooperation + + + + L1R.2. Optimization of the legal base + + + X + L1R.3. Accountability + + + L1R.4. Purposefulness + + + X L1R.5. Efficiency + + + + The cost process factors᾽ group demonstrates which factors of the regulatory institutions᾽ level have an impact on the factors of the business entities’ level. A large part of the factors that influence expenses that are important to the regulatory institutions do not exercise any influence on the needs of business entities. This means that the increase of expenses to the regulatory institutions brings no benefits to business entities, even the opposite – their expenses of regulatory process administration grow (Table 2). Table 2. Expenses process factors (created by the authors) Factors L2K.1. Coordination expenses L2K.2. Administrative expenses L2K.3. Activity᾽s adaptation to the changes in regulation. L2K.4. Consultation, training and certification expenses L2K.5. Functions᾽ consolidation L1K.1. Annual budget of institutions + L1K.2. Salaries and consultation fees + L1K.3. Number of employees + L1K.4. Number of active subjects in the public sector + + + L1K.5. Consolidation of institutions + + + L1K.6. Consolidation of functions + + X L1K.7. Coordination expenses + Journal of Business Economics and Management, 2018, 19(2): 307–322 311 The factors that influence the provision of electronic services are directly related with both the regulatory institutions᾽ needs, and the needs of business entities. The major difference is that when the regulatory institutions provide electronic services it is important to define the segment that uses the services and to define the number of those who receive the electronic services, whereas business wants to receive the required service regardless of how many business entities share the same needs. Table 3. Classification of factors on regulatory institutions’ level (created by the authors) Factors᾽ group Primary factors of evaluation Factor shaping operational qualities L1R. Regulatory process L1R.1. Cooperation Regulatory process must be mutual and different levels and institutions must work together. Institutions should communicate with other regulatory institutions on all levels and ensure accessibility to users. L1R.2. Optimization of the legal base Abolish, simplify, merge legal acts or informational commitments or improve their regulation. L1R.3. Accountability Institutions must explain and accept their responsibility for their activities and participate in developing inter-institutional processes, making sure there is enough clear explanation and responsibility. L1R.4. Purposefulness Research the risk evaluation efficiency possibilities, optimize the amount of data submitted. L1R.5. Efficiency Regulatory means must be relevant to the current risk, costs must be identified and reduced as much as possible. L1K. Expenses L1K.1. Annual budget of institutions Expenses and the annual budget of institutions due to maintenance institutions᾽ standard operations must be reduced. L1K.2. Salaries and consultation fees Salaries and consultation fees during monitoring process must be reduced. L1K.3. Number of employees Expenses for staff, when supervisory institutions gather repetitive information from business entities and perform repetitive monitoring actions must be reduced. L1K.4. Number of active subjects in the public sector Expenses of coordination and monitoring functions when supervisory institutions gather repetitive information from business entities and perform repetitive monitoring actions must be reduced. L1K.5. Institutional consolidation The costs of regulations must be identified and a model to reduce them must be defined. Consolidation of institutions that work in related fields affect the efficiency of their regulatory process. L1K.6. Functional consolidation Processes of regulatory institutions identified and means to carry them out more efficiently proposed. L1K.7. Coordination costs Coordination expenses of institutions when more than one institution participates in the regulatory process. 312 V. Davidavičienė et al. Consolidation of the activities of regulatory institutions while implementing... Factors᾽ group Primary factors of evaluation Factor shaping operational qualities L1E. E-services L1E.1. Information consistency Impact on the population, businesses and government via e-services or informational system. L1E.2. Segment Size of the segment that uses the service. L1E.3. E-segment Part of the segment that has access to the e-service. L1E.4. Frequency of the service use Number of service uses per given period. L1E.5. Service cost The change in service provision and reception cost after its digitalization. L1I. Information and communications technology tools L1I.1. Maintenance work informational systems Preparation of annual and operative inspection plans and preparation of inspection schedules, carrying out the inspection, carrying out appeal procedures, fine implementation and control. Data exchange with other supervisory institutions. L1I.2. Specific work automatization systems not related to maintenance Preparation for inspection and information collection. L1I.3. Register management information systems stipulated by law Evaluation of the risk level of the controlled objects. L1I.4. Document management systems Collection of data required for the maintenance process from business subjects and survey conduction. L1I.5. Permits and licenses accounting systems Issuing of permits and licenses, administration of related data, accounting of the tax for the documents issued. L1I.6. E-services provision informational systems To help simplify citizens᾽ participation in approving new rules and standards by explaining to them official obligations and procedures. Informing businesses about future inspections, submitting the material and questionnaires currently in possession, consultations. L1I.7. Management of the operational information Data analysis, report preparation, monitoring of the implementation of the activity᾽s indicators. L1I.8. Knowledge-based information system Make public legal acts, compile information bases provide clear and systematic information and instructions that would be easily accessible to business entities. L1I.9. Risk management and evaluation informational systems Evaluation of the risk level of the controlled objects. L1I.10. Laboratory research administration systems Collection of data required for the maintenance process from business subjects and survey conduction. L1I.11. Finance management informational systems Data analysis, report preparation, monitoring of the implementation of the activity᾽s indicators. End of Table 3 Journal of Business Economics and Management, 2018, 19(2): 307–322 313 The two factor groups – the one of information and the one of communication means as a tool of increasing the regulatory efficiency – are also closely related. A large part of factors that influence the use of information and communication means are also influenced by the needs of business entities. The use of information systems is an important topic to both regulatory institutions, and to business, as they seek higher efficiency. Table 3 and Table 4 represent the hierarchal classification of factors that will be used for the analysis of the factors᾽ importance assessment (Alcaide-Muñoz et al., 2017; Anthopoulos et al., 2016; Baldwin & Black, 2008, 2016; Baldwin et al., 2014; Benz & Eberlein, 1999; Blockmans et al., 2014; Boer et al., 2016, 2017; Ceicyte & Petraite, 2018; Cheng, 2014; Choi et al., 2017; Choudrie et al., 2017; Christiansson et al., 2015; González et al., 2009; Hampton, 2005; Janssen & Voort, 2016; Juell-Skielse et al., 2017; Kersbergen & Waarden, 2004; Klievink etal., 2016; Larsson & Grönlund, 2016; Luna-Reyes et al., 2016; Mohan & Parthasarathy, 2016; Mueller, 2003; Navarro-Galera et al., 2016; Scupola & Zanfei, 2016; Urban & Joubert, 2017; Zemanovicova & Vasakova, 2016). Table 4. Factors᾽ classification on the business entities’ level (created by the authors) Factors᾽ group Primary factors of evaluation Qualities that shape the factor L2R. Regulatory process L2R.1. Time Reduce time required by the controlling institutions. L2R.2. Trust Take regulatory decisions with confidence and observe the regulatory institutions᾽ efforts to follow them. L2R.3. Consultancy Supervisory institutions must first of all be business consultants. L2R.4. Competitiveness Provide equal conditions for competition. L2R.5. Optimization of the legal base Abolish, simplify, merge legal acts or informational commitments or improve their regulation. L2R.6. Purposefulness Research the possibilities of risk evaluation efficiency, optimize the amount of data provided. L2K. Expenses L2K.1. Coordination expenses Coordination expenses obtained in cases when more than one organization participates in the regulatory process. L2K.2. Administrative expenses Administrative and general expenses obtained by business subjects that follow regulatory requirements. L2K.3. Activity᾽s adaptation to the regulatory changes Operational expenses of business entities while trying to adapt to regulatory changes. L2K.4. Consultation, training and certification expenses Operational expenses of business entities while trying to meet the obligatory certification requirements and carry out consultation or training obligations. L2K.5. Functional consolidation Processes identified and means proposed to carry them out more efficiently. L2E. E-services L2E.1. Information consistency Impact on the population, businesses and government via e-services or informational system. L2E.2. Frequency of the service use Number of service uses per given period. 314 V. Davidavičienė et al. Consolidation of the activities of regulatory institutions while implementing... Factors᾽ group Primary factors of evaluation Qualities that shape the factor L2E.3. Service cost The change in service provision and reception cost after its digitalization. L2I. Information and communication means L2I.1. E-services᾽ provision informational systems To help simplify citizens᾽ participation in approving new rules and standards by explaining to them official obligations and procedures. L2I.2. Operational information management Data analysis, report preparation, monitoring how the operational indicators are implemented. L2I.3. Knowledge based information systems Make public legal acts, compile information bases, and provide clear and systematic information and instructions that would be easily accessible to business entities. After the list of factors that influence the efficiency of consolidation of the activities of regulatory institutions while implementing e-government solutions has been compiled, one may proceed to the stage of expert evaluation when multiple criteria evaluation method is applied. At this stage it is important to establish which of the factors listed are the most significant and influential where the increase of efficiency of regulatory institutions is concerned. Evaluation of the factors᾽ significance is carried out by analyzing the case of regulatory institutions that operate in Lithuania. 2. Research methodology The multiple criteria research method was chosen in order to evaluate the efficiency and complexity of the factors that influence the consolidation of activities of the regulatory institutions while implementing e-government solutions as well as seeking a more objective and higher quality result of the evaluation, this gives a reason to look for integrated and structured evaluation approaches (Ginevičius & Ostapenko, 2015; Zavadskas & Podvezko, 2016; Zavadskas, Turskis, Vilutienė, & Lepkova, 2017). These evaluation methods encompass various combinations of qualitative and quantitative approaches – expert evaluation and the use of mathematical analysis. When the complete multiple criteria evaluation method is used, we create conditions for the alternative comparative analysis and for selection of such alternatives that provide the highest integrated criterion value. The most widely applied multiple criteria evaluation methods are TOPSIS, AHP, PROMETHEE, COPRAS and ELECTRE. For further research the AHP method was chosen, because it includes a large set of possible criteria as well as evaluative aspects of both qualitative and quantitative criteria (Brunelli, 2015; Macharis, Springael, De Brucker, & Verbeke, 2004; Saaty, 1987; Sultan, AlArfaj, & AlKutbi, 2012). Moreover, the AHP method is widely applied for solving multiple criteria problems in such fields as model planning, concept evaluation etc. In this research the aim of the AHP method was to establish the importance of the factors, to group them, create a hierarchical structure and in that way give experts opportunity to perform a complete evaluation. One of the main drawbacks of the AHP method is the complexity of the mathematical problem and the long process of calculation that is time End of Table 4 Journal of Business Economics and Management, 2018, 19(2): 307–322 321 González, M. M., Perelman, S., & Trujillo, L. (2009). Tracking the stepwise effects of regulatory reforms over time: a ‘back-door’ approach. Applied Economics, 41(2), 211-218. https://doi.org/10.1080/00036840600994294 Hampton, P. (2005). Reducing administrative burdens: effective inspection and enforcement. Norwich: HM Treasury. Janssen, M., & Voort, H. (2016). 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