An Empirical Investigation of the Effects of Economic Crisis on the Digital Transformation of Public Welfare - Some Unexpected Findings

Abstract

Economic crises are occurring with increasing frequency and duration in modern economies. They negatively affect both private and public sector organizations, but sometimes they can have some positive effects as well. However, the effects of economic crises with respect to the digitalization and digital transformation activities and aspects of organizations have been empirically investigated to a very limited extent, and only for private sector organizations. This study contributes to filling this research gap by empirically investigating the effects of economic crises on the digital transformation activities of the public organizations that perform one of the most critical functions of the modern state: public welfare. For this purpose, we have constructed a research model, based on the “Resource-based View” of the firm, and a comprehensive conceptualization of government digital transformation, as theoretical foundations. Our study has been conducted in Greece, a country hit by a strong economic crisis between 2010 and 2018. It has been concluded that this economic crisis resulted in a serious decrease of the ICT-related investment and operating expenses of the examined public welfare organizations. However, at the same time the economic crisis has unexpectedly led to a significant increase of digital transformation developments in these critical organizations, and a significant advancement in significant aspects of their digital transformation.