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- International Journal of Management (IJM)
Volume 11, Issue 5, May 2020, pp. 108-119, Article ID: IJM_11_05_011
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=5
Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.11.5.2020.011
© IAEME Publication Scopus Indexed
TRANSFORMATION OF PUBLIC
ADMINISTRATION IN A NETWORK ECONOMY
Inna Suray
Department of Public Administration and Public Service, National Academy of Public
Administration under the President of Ukraine, Kyiv, Ukraine
Nadiia Hrazhevska
Department of Economics, Macro- and Microeconomics, Taras Shevchenko National
University of Kyiv, Kyiv, Ukraine
Larysa Yakovenko
Department of Political Economy, Poltava V.G. Korolenko National Pedagogical University
(PNPU), Poltava, Ukraine
Svetlana Suprunenko
Department of Management, University of State Fiscal Service of Ukraine, Irpin, Ukraine
Hanna Sabadosh
Department of National Economy and Public Administration Kyiv, SHEI “Kyiv National
Economic University named after Vadym Hetman”, Ukraine
Vadym Gerashcenko
Department of Production and Investment Management, National University of Life and
Environmental Sciences of Ukraine, Kyiv, Ukraine
ABSTRACT
The article deals with the main aspects of the transformation of public
administration in a network economy under the influence of digitization. It is revealed
that the digitization of public administration is not a new model of public
administration. It is established that digital technologies are not only a tool for
implementing a strategy of modernizing public administration but also largely
determine the direction of change. The article presents a conceptual model of public
administration quality, which is based on the main provisions of modern concepts of
public administration: New Public Management and Good Governance. It is
established that the quality of public administration is determined by the effectiveness
and efficiency of the public administration sector. Opportunities of the public
administration sector due to digitalization are considered on the basis of best
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- Transformation of Public Administration in a Network Economy
practices of the world. Perspective tasks of the digital transformation of public
administration in Ukraine are considered.
Keywords: Public Administration, Network Economy, Digitization
Cite this Article: Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko,
Svetlana Suprunenko, Hanna Sabadosh, Vadym Gerashcenko, Transformation of
Public Administration in a Network Economy, International Journal of Management,
11 (5), 2020, pp. 108-119.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=5
1. INTRODUCTION
The trend of modernity is an intensive introduction to all spheres of life of information and
communication technologies. There is a transformation of industrial society into a post-
industrial, informational one (Dzwigol et al. 2020; Hoffmann, Prause 2018; Omelyanenko,
Volodin 2017). Of particular importance are national information infrastructures, and the
economic policy of the state is undergoing significant restructuring. The basis of the
information society is a network economy that creates new economic relationships, enhances
business, communication, governance, and well-being at the personal, regional and national
levels. Digital technologies are the basis for the formation of a network society. The use of
digital technologies has also affected public administration, enabling the use of new
opportunities and the latest tools of public administration (Suray I. et al.). Digital technology
brings the field of Internet technology to the forefront in the use of innovation, including in
public administration (Кwilinski 2019; Shkarlet et al. 2019). The phenomenon of digital
technologies lies in their versatility, speed and automated workflows (Tkachenko et al. 2019;
Il’ashenko 2004). The primary function of digital technologies is the exchange of information.
The proliferation of digital infrastructure (mobile devices, wireless networks, personal
computers) facilitates their integration into economic, social and political life and into the
system of providing administrative services, which translates public administration into a
completely different plane of relations with citizens, business structures, between public
authorities, management and other areas of communication. Highly developed and transitional
economies are increasing the share of the digital economy in all spheres of life, including
public administration. The introduction of the digital economy was preceded by information
technology, which prepared the information and telecommunications infrastructure, provided
access to information technology training and implementation in all spheres of life (economy,
trade, business, management, etc.). Platforms and distribution, which are the basis for the
interaction of participants, are considered by scientists to be specific signs of identification of
the current stage of economic development.
2. OBJECTIVES OF THE STUDY
The following issues are highlighted in this study:
determine the directions of the transformation of the government system in the conditions of
the network economy under the influence of digital technologies;
to develop a conceptual model of the quality of public administration in a network economy
under the influence of digital technologies.
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- Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko, Svetlana Suprunenko,
Hanna Sabadosh, Vadym Gerashcenko
3. THEORETICAL SECTION
3.1. Selection of problems of development of network economy
In the latest economic theories, the digital economy began to emerge as a separate category in
the 1990s.
The first state-of-the-art digital technology development program, the Digital Economy
Agenda, was developed by the US in 2015 (US, 2015). It includes four blocks that provide
vital opportunities for the country:
promotion of free and open Internet;
ensuring trust and security in the network;
free access to the network and the opportunity for everyone to acquire professional skills;
promoting innovation and the next generation of breakthrough and disruptive technologies.
Thus, US policy is aimed at developing the digital economy, increasing the share of
industries and industries involved in it, and comprehensive support for entrepreneurs in the IT
industry.
The Digital Economy category was recognized at European level in 2010 by the European
Commission for its Digital Single Market Strategy review under the Europe 2020 Strategy
(European Commission, 2010).
In general, there are more than 30 national and regional national programs and strategies
in the European Union aimed at accelerating the digital transformation of the economies of
Europe and industry (Table 1).
Table 1 EU digitalization strategies and programs
Country Strategy/Program
Austria Industrie 4.0 Oesterreich
Belgium Made different – Factories of the future
Czech Republic Průmysl 4.0
Germany Industrie 4.0
Denmark Manufacturing Academy of Denmark (MADE)
Spain Industria Conectada 4.0
France Alliance pour l’Industrie du Futur
Hungary IPAR4.0 National Technology Initiative
Italy Industria 4.0
Lithuania Pramonė 4.0
Luxembourg Digital For Industry Luxembourg
Netherlands Smart Industry
Poland Initiative and Platform Industry 4.0
Portugal Industria 4.0
Sweden Smart Industry
Great Britain Digital Strategy 2017
In 2017, the EU Commission launched a single platform for information exchange – EU
Single digital market, which brought together national initiatives of the participating countries
with an only digitalization course. This platform complements national digitalization projects,
initiates joint implementation of investment projects, provides them with financial support,
serves as a forum for the exchange of experience, creates conditions for the training and
retraining of highly qualified personnel. The platform brings together all possible resources to
develop digital technologies and digital industrial platforms, including high-performance
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cloud infrastructure for science and innovation, tests large-scale projects, and develops
standards for their implementation.
An assessment of the current state of network readiness of the countries in the NRI (The
Networked Readiness Index) is presented in Table 2 (The Global, 2016).
Table 2 Network Leadership Rating Network (NRI) Group
Valua- Income Valua- Income
Rating Country Rating Country
tion level* tion level*
1 Singapore 6,0 HI 11 Denmark 5,6 HI-OECD
2 Finland 6,0 HI-OECD 12 Hong Kong 5,6 HI
3 Sweden 5,8 HI-OECD 13 South Korea 5,6 HI-OECD
4 Norway 5,8 HI-OECD 14 Canada 5,6 HI-OECD
5 USA 5,8 HI-OECD 15 Germany 5,6 HI-OECD
6 Netherlands 5,8 HI-OECD 16 Iceland 5,5 HI-OECD
7 Switzerland 5,8 HI-OECD 17 New Zealand 5,5 HI-OECD
8 Great Britain 5,7 HI-OECD 18 Australia 5,5 HI-OECD
9 Luxembourg 5,7 HI-OECD 19 Taiwan, China 5,5 HI
10 Japan 5,6 HI-OECD 20 Austria 5,4 HI-OECD
* HI = non-OECD high-income economy;
HI-OECD = OECD high-yielding members
Singapore and European countries (Finland, Sweden, Norway, Netherlands, Germany,
Switzerland, the United Kingdom, Luxembourg) and the United States and Canada are leaders
in network readiness. The experience of countries with a high level of network readiness
shows that the main mechanisms of a network economy are as shown in Fig. 1.
back-office
consolidation
cloud digital
scalability collaboration
Mechanisms of
enhanced network economy
communication Big Data
supply chain
e-commerce automation
Figure 1 Mechanisms of the network economy
The current state of Ukraine's digital economy in terms of global development indices is
presented in Fig. 2.
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- Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko, Svetlana Suprunenko,
Hanna Sabadosh, Vadym Gerashcenko
90 85 83
78 79 81
80
70
60 56
50
50 43
40
30
20
10
0
Global Innovation Index ICT Development Index (ITU) Global Competitiveness Index
(INSEAD, WIPO) (WEF)
2016 2017 2018
Figure 2 Indicators of the development of the digital economy of Ukraine
Networked Readiness Index (WEF) – index, the indicator of which characterizes the level
of development of information and communication technologies (The Networked Readiness
Index, 2016). Global Innovation Index (INSEAD, WIPO) is a global innovation index
published with the support of the World Intellectual Property Organization (The Global
Innovation Index, 2018). According to this rating, Ukraine has improved its position in two
years and has positive trends. The ICT Development Index (ITU), an index of information
and communication technology development that characterizes countries' achievements in
information and communication technology development, is compiled and published by the
United Nations Special Unit (International Telecommunications Union, 2017). Over the last
two years, Ukraine's rating has not changed dramatically. Global Competitiveness Index
(WEF) – The Global Competitiveness Report, 2017-2018. Ukraine's score on this index is
unstable.
The digital economy is directly connected to the Internet. According to the US company
"We Are Social" and the Canadian company "Hootsuite", the state of digitalization in Ukraine
is presented in Fig. 3.
62.62
2018-2019 40.91
43.9
65.63
2017-2018 25.59
44.12
63.45
2016-2017 21.93
44.51
64.11
2015-2016 19.41
44.72
0 10 20 30 40 50 60 70
Mobile subscriptions, million Internet users in Ukraine, million people.
Population of Ukraine, mln.
Figure 3 Dynamics of Internet usage in Ukraine in 2015-2019
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- Transformation of Public Administration in a Network Economy
As can be seen from Fig. 3, the number of Internet users in Ukraine has a positive trend.
The analysis shows that the share of Internet users relative to the population of the country is
increasing. In the last four years, the number of mobile users in Ukraine has significantly
exceeded the people of the country as a whole. This is since a large part of the population of
Ukraine has several mobile devices (smartphone, tablet). Types of Internet connection in
Ukraine: cable communication, mobile Internet, Internet via radio, satellite Internet. There are
over 4,000 Internet service providers in Ukraine. However, stability in the digital economy
and the digital needs of society requires the quality and speed of internet connection. Starting
from 2015, 3G communications across the most significant mobile carriers (Kyivstar,
VodafonUkraine and Lifecell) have begun to scale up in Ukraine. Throughout 2018, Ukraine
has significantly increased its ability to access high-quality and high-speed Internet, including
the introduction of mobile 4-G internet connection. The results of a study by Cable.co.uk, a
UK-based provider that analyzes internet accessibility in 230 countries, show that mobile
Internet in Ukraine is the cheapest in Europe and the fourth most accessible in the world.
Therefore, there are sufficient conditions in Ukraine to ensure the accessibility of mobile
Internet connection to every citizen. However, quality internet coverage does not cover the
entire territory of Ukraine and, as a consequence, slows down the speed of the digital
economy.
Improving the quality of mobile Internet is possible through upgrading infrastructure,
investing in maintaining existing quality and expanding communication channels. Network
optimization is needed to enhance the Internet connection. In Ukraine, the number of digital
services is increasing, but not always and not everywhere is the opportunity to use them. In
some small settlements, there is no internet communication. Therefore, improving the Internet
will increase the country's electronic capabilities, which will increase demand and
competition in the digital economy. And as a result, it will boost the digital economy
development index.
4. METHODOLOGY
Digitization of public administration is not a new model of public administration. Research
hypothesis: digitalization of public administration can help increase its effectiveness. At the
same time, digital technologies are becoming not only a tool for implementing the strategy of
modernization of public administration but also largely determine the direction of change.
Thus, we can assume that a high level of digitalization of public administration provides a
higher level of quality of public administration as a whole or its parameters. One of the main
directions of implementation of the digitalization strategy is to increase the efficiency of
public administration, the interaction of civil society and business with public authorities,
quality and efficiency of public services, including through further development of e-
government and the transition to digital government. Criteria for effectiveness and efficiency
become components of ensuring the quality of public administration. Therefore, it is essential
to form a conceptual model of the quality assurance system of public administration based on
the usefulness of public administration results that meet the requirements of all groups of
stakeholders.
5. RESULTS AND DISCUSSION
5.1. International experience in digitalization of public administration
The introduction of digital technologies in government is a trend for all countries of the
world. The digitalization of processes brings organizational changes to the work of the
government, the functioning of government bodies, increases transparency, accountability,
thereby improving the quality and efficiency of the public sector.
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- Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko, Svetlana Suprunenko,
Hanna Sabadosh, Vadym Gerashcenko
Many states are transforming administrative service delivery systems through digital
government implementation, based on people's needs and preferences. Experience shows that
only systematic use of innovative information technologies in decision-making processes,
including the formulation of comprehensive public sector reform strategies and programs, is a
prerequisite for improving the well-being of society. The proportion of people using
eGovernment services (that is, visiting or interacting with official websites) has been steadily
increasing in recent years but varies significantly across countries. For example, in 2016 it
was 88% in Denmark and less than 25% in Brazil, Chile, Italy, Mexico and Colombia. The
number of citizens submitting completed online forms also varies widely: 50% or more in
Northern Europe, Estonia, the Netherlands and France and less than 10% in Mexico, Japan.
These differences are due, in particular, to the underdeveloped infrastructure and the limited
supply of electronic services, as well as to structural problems caused by institutional, cultural
or economic factors (OECD, 2017). According to the UN rating, the top ten in 2018 include
Denmark, Australia, the Republic of Korea, the United Kingdom, Sweden, Finland,
Singapore, New Zealand, and France (UNE-Government, 2018).
Most countries have adopted digitalization strategies and are actively using breakthrough
technologies: blockchain, big data, the Internet of Things, artificial intelligence, and more. For
example, a border.dk state-owned portal has been created in Denmark, which contains a
personalized page with citizen-accessible services, a mandatory digital mailbox for
individuals and businesses. A portal providing access to personal health information
(sundhed.dk) is also open.
Effective business communication through Virk.dk and NemHandel, an open e-business
environment that enables businesses to securely and securely send standardized electronic
invoices (UNE-Government, 2018). Thanks to the Digital Strategy for 2016-2020, which
regulates the process of digitalization of the public sector, and defines the vector of its
interaction with business organizations and industry, Denmark is successfully continuing to
develop digital government and electronic services. Among the priorities is the creation of a
platform that will simplify the management of the business and reduce its administrative
burden through the introduction of automatic reporting. In doing so, businesses will gain
access to more public sector data that can serve as a basis for new business opportunities and
innovations (The Digital strategy, 2016-2020).
The highest e-government information and development rankings are the Republic of
Korea. Formulated in 2011, the Plan for a Reasonable E-Government has provided a wide
range of public services based on mobile platforms. Portals have been created to give
customs, tax, civil, patent, and e-People online services for civil appeals to administrative
institutions, and an online business management system for the government's online business
– Onnara (Korea, 2020). Developed the eGovernment Master Plan for 2020 envisages the
transformation of government based on intelligent information technology to create a new
ecosystem that will become the ground for government innovation that is implemented for
sustainable growth. Among the key objectives are the emergence of new public sector-led
digital industries, cloud-based, next-generation administrative information security
infrastructure, and strengthening the position as a significant e-government exporter (Korea,
2020). One of the factors in the proliferation of digital public services in Estonia has been the
development of a digital ecosystem based on blockchain technology, which brought together
the participation of all spheres of statehood in a single information space. The formation of a
digital society in Estonia has been made possible by the established infrastructure, which is
based on a decentralized system connected to a series of networks. In the UK, public sector
development promotes and implements R&D funded through public-private partnerships and
public procurement, including a platform for high-tech small businesses.
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The analysis shows that the digitization of public administration significantly increases
the effectiveness of public sector interaction with society. Yes, Denmark's transition to public
service delivery only in digital form has reduced the cost of the service by 50%. A large-scale
digital and technology optimization program has helped the UK save up to $ 4.3 billion in
2016. Saudi Arabia uses big data for digital employment services, which helps reduce
bureaucracy, saves up to $ 1 billion for a year.
The analysis of international experience shows that the formation of a strategy for the
transition to a digital government oriented to the citizens is a fundamental condition for the
fullest realization of the opportunities provided by the digital transformation of public
administration and society as a whole. In doing so, it requires the introduction of new forms
of interaction, skills, multifaceted use of large data sets.
5.1. Conceptual model of public administration quality assurance system based
on the usefulness of public administration results that meet the requirements of
all stakeholder groups
To analyze the concept of digital transformation in public administration is advisable to
identify the main stages of digitalization. Thus, OECD experts identify three main stages of
digital transformation:
digitalization of processes, within which the introduction of traditional digital technologies to
improve the efficiency of government, data management;
e-government, which involves the introduction of digital technologies, especially based on the
use of the Internet, to enhance public administration;
digital government, in which the latest generation of digital technologies (such as the Internet
of Things, artificial intelligence, predictive analytics) allows to take into account the
preferences of users in shaping the composition of services provided and procedures related to
their receipt.
According to experts, the digital transformation in public administration involves five
stages of maturity from e-government to "smart government". These stages differ both in their
priority aspects and in the channels and technologies of public services, as well as in the
indicators of implementation, based on which it would be possible to measure the
implementation of a particular stage. It is important to emphasize that the technological
solutions relevant to the initial stages of digital government maturity are not adequate for the
later stages of its formation.
Implementation of projects on digitalization of public administration, as a rule, is aimed at
improving the effectiveness of public administration, including the quality of public services
and/or its efficiency, i.e. to reduce the costs of the state, business and/or citizens related to the
implementation of other government functions.
It should be noted that currently there are several legal, economic, technological,
organizational and infrastructural limitations of digitalization of public administration,
without removing (or significantly reducing) some areas of digitalization may be ineffective
and/or ineffective. The fundamental limitations of the transition to automated interaction are
related to the uneven level of digital infrastructure development, the risks of technological
failures and the risks of disclosure of trade secrets. The principal risks of implementing digital
technologies are:
loss of control in critical areas of public administration;
unauthorized use of personal data;
the possibility of human rights violations in automated management decisions;
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- Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko, Svetlana Suprunenko,
Hanna Sabadosh, Vadym Gerashcenko
organizational risks, including the resistance of the authorities to the transition from
departmental informatization to platform (departmental) decisions (risk of loss of control, fear
of openness of their data).
The ability and feasibility of using digital technologies related to the Internet of Things
and machine-to-machine interaction largely depend on the quality of mobile communications
and its cost. Effective implementation of inter-machine interaction requires widespread
penetration of fifth-generation (5G) networks, which is unrealistic in the coming years for
underdeveloped countries.
However, with the current level of development of information and computer technology
infrastructure, it is possible to test the systems of inter-machine interaction on some examples,
which minimize the other risks mentioned above (for example, in the formation of budget and
tax reporting in the public sector). In the medium and long term, this practice can be
implemented to automate the interaction of other organizations with government agencies.
The potential use of digital technologies can significantly reduce government intervention
in economic and social processes, increase the efficiency and effectiveness of public
administration. The effect of reducing the administrative costs of business, citizens and the
state, increasing the availability of civil (in a broad sense) services, the level of protection of
citizens and minimizing the risk of harm in the controlled (supervised) areas can be
significant. Mass implementation requires separate experiments and pilot projects (for
example, on the automatic collection of statistics), as well as the elimination of infrastructural,
legal and organizational constraints.
The concept of quality of public administration is based on efficiency (a set of qualitative
indicators), and efficiency (quantitative, relative indicators) are the main provisions of modern
concepts of public administration: New Public Management and Good Governance [World,
1994; Terry, 1998] (Fig. 4).
Reduction of government spending. Growth of competencies of state power
for the formation and implementation of public policy. Improving the
quality of state performance of functions as an employer. Improving the
quality of public services. Strengthening public and private confidence in
government.
New Public Management
respect of citizens government
and the state to the selection and
institutions of control processes;
social and Quality of public the government's
economic administration ability to formulate
interaction in and implement
society policies correctly.
Good Governance
Complicity in government decision-making. Achieving consensus in decision
making. Vision of strategy. Formation of feedback. Achieving efficiency in
public policy. Team responsibility of public administration. Ensuring
transparency. Achieving equality. Ensuring the rule of law.
Figure 4 Conceptual model of public administration quality assurance system
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According to the concept of New Public Management, the targets for ensuring the quality
of public services should be the following criteria: reduction of public spending; growth of
competencies of state power for the formation and implementation of public policy;
improving the quality of state performance of functions as an employer; improving the quality
of public services; strengthening public and private confidence in the government. Following
the concept of Good Governance, the criteria for the quality of public aftermath are
complicity in public decision-making; reaching consensus in decision-making; strategy
vision; formation of feedback; achieving efficiency in conducting public policy; command
responsibility of public administration; ensuring transparency; achieving equality; ensuring
the rule of law. According to the selected criteria, a set of indicators is formed, which are
subject to systematic periodic monitoring to identify critical problems and timely adequate
response.
The parameters that determine the quality of public services as a set of institutional
entities and traditions through which public authorities govern the country are the processes of
selection and control of the government; the government's ability to properly formulate and
implement policies; respect of citizens and the state to the institutions of social and economic
interaction in society.
The following strategic technologies for the public sector of Ukraine are distinguished:
digital workplace; multi-channel information and involvement of citizens; open data;
electronic identification of citizens (e-ID); ubiquitous analytics; "Smart" machines and tools;
Internet of Things; digital government platforms; software architectures; blockchain. The
trend of public administration is the unification and outsourcing of processes. An essential
point in the transformation of public administration is technology based on cloud strategy,
cloud computing.
The introduction of public-private partnership models in the field of e-government in
Ukraine is a great solution for increasing the quantity and quality of public online services.
The creation of e-parliament is a condition for the development of e-democracy; e-voting; e-
justice; e-mediation; e-referendum; e-voting; e-consultations; e-petitions; e-political
campaigns; e-poll.
6. CONCLUSION
Thus, the digitalization of the economy has a significant impact on the ability to provide
public administrative services. At the same time, digitalization itself is not a specific
mechanism, but only a set of new tools and capabilities. The process of the digital
transformation of society has a significant impact not only on the possible ways to solve the
problems of public administration, but changes their composition and content characteristics,
requiring a coordinated improvement of methodology and tools. Institutional conditions for
public administration require expanding the range of applications of digital technologies at
different stages and levels. The conceptual model of public administration quality is
presented, which is based on the main provisions of modern concepts of public
administration: New Public Management and Good Governance. It is established that the
quality of public administration is determined by the effectiveness and efficiency of the public
administration sector. Opportunities of the public administration sector due to digitalization
are considered based on best practices of the world. Perspective tasks of the digital
transformation of public administration in Ukraine are considered. Assessment and risk
management of public transformation.
http://www.iaeme.com/IJM/index.asp 117 editor@iaeme.com
- Inna Suray, Nadiia Hrazhevska, Larysa Yakovenko, Svetlana Suprunenko,
Hanna Sabadosh, Vadym Gerashcenko
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nguon tai.lieu . vn
