=Paper=
{{Paper
|id=Vol-3855/aem4
|storemode=property
|title=Blockchain-Powered Decentralisation: A New Era of Public Governance
|pdfUrl=https://ceur-ws.org/Vol-3855/aem4.pdf
|volume=Vol-3855
|authors=Gideon Mekonnen Jonathan
|dblpUrl=https://dblp.org/rec/conf/ifip8-1/Jonathan24
}}
==Blockchain-Powered Decentralisation: A New Era of Public Governance==
https://ceur-ws.org/Vol-3855/aem4.pdf
Blockchain-Powered Decentralisation: A New Era of
Public Governance
Gideon Mekonnen Jonathan
Department of Computer and Systems Sciences (DSV), Stockholm University, Borgarfjordsgatan 12, SE-16455 Kista,
Sweden
Abstract
Decentralisation, a public governance model known for its potential to enhance efficiency and public
value creation, can be facilitated through digital transformation, particularly by making use of blockchain
technology. Research in the information systems and public administration domains has shown that
blockchain’s distributed ledger systems enable transparent, tamper-resistant record-keeping and au-
tomated processes via smart contracts, reducing the need for centralised control. However, despite
its promises, the adoption of blockchain in public organisations has been slow, with empirical studies
yielding mixed results regarding its impact on organisational performance. This study investigated to
explore whether blockchain-enabled digital transformation can facilitate decentralised public governance
and subsequently improve organisational performance. Employing a mixed-methods research strategy—
literature review, case study, and survey—the paper identifies and ranks critical factors that influence the
relationship between blockchain-driven digital transformation and organisational performance.
Keywords
Blockchain, Decentralisation, Digital transformation, Public governance, Public value, Processes
1. Introduction
Digital transformation, which refers to “a fundamental change process, enabled by the innovative
use of digital technologies accompanied by the strategic leverage of key resources and capabilities,
aiming to radically improve an entity [i.e., an organisation, a business network, an industry, or
society] and redefine its value proposition for its stakeholders” [1, p. 12] has been one of the topics
that garnered the attention of researchers and practitioners alike. Even though the private sector
has been in the forefront in the adoption of emerging technologies with the aim of radically
altering business models and improving value propositions to their customers, organisations in
the public sector are under pressure to embark their own transformation journey. In fact, in the
past few decades, digital transformation has emerged as an essential means of improving the
public service delivery, operational efficiency, transparency, and citizen engagement.
Digital transformation of the public sector has most recently become one of the top agenda for
many governments seeking to enhance public service delivery through the adoption of advanced
Companion Proceedings of the 17th IFIP WG 8.1 Working Conference on the Practice of Enterprise Modeling Forum, M4S,
FACETE, AEM, Tools and Demos co-located with PoEM 2024, Stockholm, Sweden, December 3-5, 2024.
Envelope-Open gideon@dsv.su.se (G. M. Jonathan)
GLOBE https://gideon.blogs.dsv.su.se/ (G. M. Jonathan)
Orcid 0000-0001-6360-7641 (G. M. Jonathan)
© 2024 Copyright for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
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technologies. This strategic shift is driven by a growing recognition of the need to modernise
operations, increase efficiency, and better meet the evolving expectations of citizens in a digital
age. The list of emerging technologies that are being adopted is long. However, among the
innovative technologies driving this transformation, blockchain has emerged as a particularly
promising candidate due to its potential to revolutionise not only the various operations and
processes within organisations in the sector but also public governance. As Ølnes et al. [2] argue,
blockchain’s decentralised nature offers a paradigm shift in how public services can be structured
and delivered. This decentralisation promises to enhance transparency, security, and citizen
participation in governmental processes, potentially addressing longstanding challenges such as
bureaucratic inefficiencies, lack of trust in institutions, and the need for more direct democratic
engagement [3, 4]. According to Atzori [5] blockchain could facilitate a shift from traditional
hierarchical, centralised governance structures to more horizontal, decentralised models. This
transition holds significant promise for enhancing democratic participation, reducing corruption,
and improving the efficiency of public service delivery. By leveraging blockchain’s distributed
ledger technology, public sector organisations can explore new models of service delivery
that are more resilient, accountable, and responsive to public needs, marking a significant
step forward in the ongoing evolution of digital governance. Besides, the alignment between
blockchain’s capabilities and the growing trend towards more participatory and distributed
decision-making in the public sector suggests a promising avenue for innovation [6].
While the potential benefits of blockchain in public governance are widely discussed, the
extent to which these benefits can be realised in real-world public sector contexts remains
an area of active research, necessitating further empirical investigation. An assessment of
implementations of the technology in public organisations in various countries (for instance,
[7]) indicates that the transformative power of blockchain for the sector is a function of various
factors. Prior research has identified several significant barriers to the missed opportunities
not realised. These challenges include stringent legislation and regulatory uncertainty arising
from the lack of clear and standardised regulations; security and privacy concerns related
to the protection of sensitive data stored on blockchain networks; infrastructure limitations
in developing countries such as insufficient bandwidth or lack of interoperability between
different blockchain platforms; or the lack of sufficient and uninterrupted energy source in
some countries with limited resources or stringent environmental policies [8, 9]. Even though
the technical and external environmental issues related to the adoption of blockchain in the
public sector have been explored relatively better, there is a notable gap in empirical research
examining the organisational factors that influence the success of the use of the technology in
such a way that it contributes to the realisation of the benefits of digital transformation. We
reckon with researchers (e.g., [7]) that understanding these factors is crucial for realising the
promise of improved organisational performance through blockchain-enabled decentralisation.
Thus, Kenya (i.e., a country at the forefront of digital innovation in Africa) is selected for this
study as it provides an ideal context to examine the intersection of blockchain technology
and public sector transformation. We argue that the country offers valuable insights into the
challenges and opportunities of implementing blockchain solutions in developing economies
with its rapidly evolving technological landscape and ongoing efforts to improve public service
delivery [10].
This study aims to investigate how public organisations can improve the use of blockchain
technology to realise the benefit of digital transformation to facilitate the decentralisation
of public governance and subsequently improve organisational performance. Even though
blockchain is gaining recognition for the benefits it brings to many organisations, the attention
of prior studies have been its adoption and transformative advantages in specific sectors (for
instance, in the finance sector) [11]. Thus, to address the gap in the literature and meet the aim of
the study, the following research question is formulated: How do organisational and managerial
factors influence the success of the use of blockchain to realise the benefit of digital transformation
in improving the performance of public organisations? By answering this question, we aim
to uncover the key determinants that either enable or hinder the effective use of blockchain
solutions in the public sector, with a particular emphasis on their impact on decentralisation
and organisational performance. It is our conviction that the answer to the research question
bridges the gap between the theoretical potential of blockchain in public governance and its
practical implementation, offering valuable insights for both researchers and practitioners in
the field of digital transformation.
This paper is structured in five sections. In the second section, we briefly discuss digital
transformation within the public sector context and present our hypotheses along with a
theoretical research model. The subsequent section presents the research methodology—the
research strategy adopted along with the data collection and analysis methods. The results
section briefly discusses the result of our evaluation of our measurement- and structural models.
Finally, the contribution and limitations of the study will be presented.
2. Literature Review and Hypotheses Development
2.1. Digital Transformation in the Public sector
Within the context of the public sector, digital transformation is considered a comprehensive and
coordinated effort to modernise the operations of organisations with a focus on creating added
public value for citizens. Specifically, the aim of a digital transformation endeavour is to improve
policies, processes, and services, aiming to deliver enhanced value to both citizens and businesses
as well as satisfying employees within the sector [12]. In other words, the application of digital
technologies is intended to benefit both internal stakeholders responsible for the creation and
delivery of these services as well as external parties involved not only in the creation of public
services but also users of the digital services. Thus, the management of digital transformation
is a multifaceted endeavour that extends beyond technology adoption. It involves strategy
formulation that addresses the interests of a long list of stakeholders. This is a daunting task that
calls for aligning organisational goals, fostering a culture of innovation, implementing effective
change management practices, establishing data governance frameworks, managing risks,
investing in talent development, and measuring progress. Even though digital transformation is
the appropriate use of various emerging digital technologies, these underlying principles remain
consistent for successful digital transformation. The literature review conducted for this study
indicates that, regardless of the technology used to drive transformation in an organisation, the
ultimate goal is to maximise the benefits of the use of technologies in achieving the creation
of added public value for customers (i.e., mainly citizens). For instance, according to Jonathan
et al. [13], blockchain-driven digital transformation improved the organisational performance
of public organisations. According to the study, the adoption of the technology has resulted
in improved citizen participation, operational efficiency, and public trust. Looking into the
impact of digital transformation on the internal processes of public organisations, studies have
reported a positive effect on knowledge management [14] and human resource development
[15]. Thus we posit the following:
H1: Digital transformation positively influences organisational performance in public organisa-
tions.
Similar to digital transformation studies in the private sector, the potential benefits and
significant improvements that can come through digital transformation are widely recognised
in the extant literature. However, researchers (e.g., [16]) argue that the focus of prior studies
has been primarily on technological advancements. At the same time, the critical role of
organisational as well as internal and external organisational factors in the realisation of
the benefits of digital transformation has not attracted sufficient attention. Particularly, the
lack of studies investigating the management of fundamental change processes within public
organisations, which can affect the design, production, and delivery of public services, is
rarely explored [12, 17]. However, there is a growing consensus among scholars that effective
digital transformation in the public sector requires a nuanced understanding of the unique
characteristics of public organisations. For instance, Plesner et al. [18] emphasise the importance
of considering bureaucratic formal structures and accountability issues when studying digital
transformation in organisations within the public sector.
2.2. Determinant Factors of Digital Transformation in the Public Sector
Digital transformation, regardless of sector or industry, involves a multifaceted process of
organisation-wide changes, encompassing both incremental adjustments and significant shifts.
This contrasts with traditional transformations, where digital transformation is characterised
by the adoption of new digital technologies to replace outdated tools, which will have impli-
cation on many aspects of an organisation. For instance, digital transformation often leads
to substantial alterations in organisational processes and workflows. Thus, a digital transfor-
mation journey necessitates a redefinition of roles and responsibilities within an organisation.
The most obvious challenge as emerging technologies are being introduced continuously and
rapidly is that employees at various levels also need to acquire new sets of skills to discharge
their responsibilities appropriately [19]. In fact, a phenomenon referred to as organisational
readiness—the availability of necessary organisational resources that can enable and facilitate
the adoption of emerging technologies—has been one of the important determinants of success-
ful digital transformation. For instance, the adoption of blockchain technology was found to be
influenced by organisational readiness, which entails the availability of skilled manpower as
well as financial and IT infrastructure [20]. Thus we posit the following:
H2: Organisational readiness is positively associated with digital transformation success in
public organisations.
The introduction and integration of new technologies with existing systems and processes, as
well as making organisation-wide adjustments, requires a coordinated and strategic approach
that aligns organisational objectives and fosters a shared vision. A well-formulated strategy is
essential as many public organisations must navigate complex and often intangible organisa-
tional goals. Prior studies have shown that leaders in the public sector struggle to guide their
organisations through the complex landscape of digital transformation [17, 21]. According to
the extant literature, developing and implementing an effective strategy can be particularly
challenging in the public sector given its pluralistic nature and diverse stakeholders with often
conflicting interests [13, 22, 23]. Unfortunately, the lack of digital strategy supporting the
digital transformation of governments at different levels has been cited as one of the reasons
many digitalisation efforts in the public sector fail [24]. The presence of multiple stakeholders
with competing objectives can hinder progress and create obstacles to crafting a robust digital
strategy for transformation initiatives. However, overcoming these challenges necessitates a
strong commitment to a shared vision and a unified organisational goal, which can significantly
facilitate the digital transformation journey. Thus we posit the following:
H3: Digital strategy is positively associated with digital transformation success in public organi-
sations.
Even though a robust strategy and the availability of the right resources to support digital
transformation are essential, the role of leaders with the competence to realise the benefits of
digital transformation is crucial. In addition to being competent in mobilising human resources
within an organisation and formulating robust digital transformation strategies, transforma-
tional leaders promote an organisational culture that encourages experimentation with emerging
technologies and innovation. According to the extant literature, transformational leaders—with
the ability and will to inspire, motivate and empower employees—create an environment where
essential skills necessary to make use of emerging technologies are developed, and radical ideas
are embraced [25]. Thus we posit the following:
H4: Transformational leadership is positively associated with digital transformation success in
public organisations.
Similar to the adoption of any emerging technology in a digital transformation journey, the
adoption of blockchain requires a proactive and adaptive approach to navigate the rapidly
evolving landscape, a phenomenon referred to as organisational agility. Organisational agility
encompasses the ability to not only anticipate future trends (both opportunities and needs) but
also to swiftly make the necessary changes in response [25]. In the context of blockchain, agile
public organisations are expected to be adept at identifying potential applications, evaluating
their feasibility, and implementing solutions that align with their strategic objectives and address
pressing societal challenges. This involves reconfiguring existing digital assets and capabilities
to achieve successful digital transformation [26]. Prior studies have also found the critical role
of organisational agility in digital transformation success [25]. Thus we posit the following:
H5: Organisational agility is positively associated with digital transformation success in public
organisations.
The extant literature highlights the important role of stakeholder involvement in successful
digital transformation initiatives[27, 13]. This assertion is particularly relevant in the context
of blockchain-driven digital transformations, where the decentralised nature of technology
can introduce complexities in stakeholder management. The rationale is that one of the most
significant benefits of blockchain technology lies in its potential to reduce transaction costs
significantly [28]. This reduction can facilitate more efficient and transparent exchanges between
internal and external actors, potentially leading to novel institutional structures to govern
these interactions [29]. Thus, maintaining favourable stakeholder relationships in a pluralistic
environment with diverse stakeholders with potentially conflicting objectives is crucial to realise
the benefits of successful digital transformation [21]. Thus we posit the following:
H6: Stakeholder relationship is positively associated with digital transformation success in public
organisations.
The theoretical research model shown in Figure 1 demonstrates the conceptualisation of the
study. The model depicts the seven constructs. The findings from the literature review and the
analysis of our interview data are the basis for the development of the model as well as the
measurement items used.
Figure 1: Theoretical research model.
3. Research Methodology
3.1. Research strategy
This study employed a mixed-methods research strategy, combining exploratory and confir-
matory elements–a systematic literature review, an exploratory case study and a quantitative
survey. This methodological choice is grounded in the recognition that mixed methods can
enhance research rigour. A systematic literature review was deemed appropriate for estab-
lishing the theoretical foundation and identifying gaps in current knowledge. This review
synthesised existing research on digital transformation and decentralisation of public gover-
nance, providing context for the study and informing the development of subsequent research
phases. The exploratory case study was undertaken to gain in-depth insights into how digital
transformation is contributing to the decentralisation of public governance and improving
organisational performance. A quantitative survey was developed and conducted in Kenya
based on the insights from the literature review and the case study (see [30] for detailed results).
This survey aimed to test hypotheses derived from earlier phases and to establish the strength
of the relationships between the constructs discussed in the qualitative part of the research.
3.2. Data Collection Methods
This study is conducted in three stages. First, a systematic literature review was conducted
to establish a theoretical base and provide the state-of-the-art. The extant literature in the
Information Systems (IS) and public administration domains was deemed relevant for the
review. Thus, the search for relevant studies was conducted in databases indexing databases
known to index premier journals in these two fields. The aim was to establish the current
developments and adoption of digital transformation in the public sector as well as understand
its impact on the decentralisation of public administration. However, our focus was to identify
studies that looked into the application of digital technologies and the factors that determine its
success in improving the performance of public organisations. Thus, we used a combination of
keywords (i.e., “digital transformation”, “digitalisation”, “public governance”, “decentralisation”,
“centralisation”, “public organisations”, “public administration”, “organisational performance”)
while searching for IS and public administration journals. The literature search resulted in
28 relevant articles, i.e., 12 in the information systems research area and 16 from the public
administration literature.
The second phase of data collection involved semi-structured interviews conducted between
March and April 2023. The primary objective was to gain in-depth insights into how public sector
practitioners plan and implement digital transformation to achieve the benefits of decentralised
governance, improving the performance of public organisations. A purposive sampling strategy
was employed to select interview participants, aligning with recommendations from previous
digital transformation studies. Specifically, experts in the field of digital technologies and their
application in public administration were sought [31]. Participants were identified through a
combination of random email outreach to CIOs and public administrators attending a conference
and referrals from existing respondents. The final sample included eight CIOs, two CDOs,
and three IT managers responsible for digital transformation. A total of 13 interviews were
conducted, generating over 12 hours of recorded data that were subsequently transcribed. The
decision to use non-probability sampling was based on the study’s aim to provide in-depth
insights rather than generalise findings to a wider population. By focusing on “experts” as
defined by Bogner et al. [32], the sampling strategy ensured that only respondents with the
necessary experience and positions could provide valuable information. According to Ritchie et
al [31], the non-probability sampling strategy ensures that only respondents with the experience
and position to have relevant information were selected for the study. The third part of our study
involved collecting quantitative data to run a confirmatory analysis based on the literature
review results and interviews. The final number of respondents who returned a complete
response to the survey questionnaire is 208 (see Table 2).
Measurement items derived from the extant literature were used to test the research model
and the hypotheses posited. For all measurement items, 7-point Likert Scales were adopted.
The unit of analysis for the study is the public sector. Thus, the questionnaires are formulated
so that respondents answer how the various factors, identified according to the literature review
and analysis of interviews, determine the impact of digital transformation (i.e., the adoption
of blockchain in the decentralisation efforts) on the performance of public organisations. The
online survey questionnaire was pre-tested with 15 leaders randomly selected from three
public organisations. Only minor revisions were necessary to address issues raised by pre-test
participants. The questionnaire with the active link to the survey was sent to 550 experts.
In addition to the demographic questions, a dummy question was also included to exclude
unserious responses. The online survey, active for 45 days (between August and September of
2024), resulted in 208 complete questionnaires with a response rate of 37.8 per cent.
Table 1: Demography of respondents, their roles and organisational affiliations.
Organisation Type n % Role n %
Regional government 23 11.1 Executive 28 13.4
City administration 48 23.1 Middle management 117 56.3
Ministry 93 44.7 Team leader 37 17.8
Public University 29 13.9 Specialist 26 12.5
Justice 7 3.4 Sex n %
Other 8 3.8 Male 148 71.2
Female 60 28.8
Organisational Size
n % Age n %
(Number of employees)
100-250 21 10.1 20-30 43 20.7
251-1000 112 53.8 31-40 85 40.9
1001-5000 26 12.5 41-50 51 24.5
>5000 49 23.6 >51 29 13.9
3.3. Data Analysis Methods
Consistent with the aim of the study—(1) exploring how the digital transformation of public
organisations using blockchain technology can facilitate the decentralisation of public gover-
nance to improve organisational performance, and uncovering the determinants enabling or
hindering the effective implementation of blockchain solutions–we employed both qualitative
and quantitative data analysis methods.
Thematic data analysis method was chosen for the qualitative part of the study (i.e., the
systematic literature review and case study). The method has gained popularity among IS
researchers since it is not tied to particular theoretical or epistemological stances [33]. The
choice was justified for this study since we aimed to categorise the impact of specific factors
relevant to the phenomenon we set out to investigate. Regarding the literature reviews, the
selected articles were analysed using a concept matrix, as suggested by Webster and Watson [34].
The analysis of the interview data was according to the six-step thematic analysis procedure
by Braun and Clarke [35]—transcribing and familiarising with the data, generating initial
codes, sorting codes and grouping them into potential sub-themes, reviewing the sub-themes,
defining, grouping and naming the sub-themes into themes, and producing the report. It is
worth mentioning that after the recorded interviews were transcribed by the researchers who
conducted the interviews, the transcription was sent to the respondents to make sure there
what had been said was captured. Prior research on digital transformation and decentralisation
of public governance was consulted as a basis for coding (i.e., inductive coding).
The final stage of data analysis involved the quantitative data collected from the online
survey questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) was
employed to test the proposed hypotheses and theoretical model (Figure 1). As a second-
generation multivariate data analysis method [36], PLS-SEM has gained widespread popularity
among researchers in information systems and related fields [37]. Previous studies on digital
transformation and adoption of blockchain in public organisations have also successfully utilised
this technique [38, 39]. PLS-SEM was particularly well-suited for this study due to its ability
to assess the influence (i.e., causal prediction) of various factors on digital transformation and
adoption of blockchain technology to improve organisational performance. Moreover, given the
purposive sampling strategy and relatively small sample size (n=208) of potential respondents in
public organisations, PLS-SEM was a preferable choice compared to other SEM techniques. Hair
et al. [37] recommends PLS-SEM for studies with limited sample sizes, suggesting a minimum
of ten times the number of independent variables. This study met this criterion.
Following the recommendations of Hair et al. [37], the PLS-SEM analysis was conducted
in two stages—evaluation of the measurement model and assessment of the structural model.
Given that all constructs in this study are formative, the evaluation of the measurement model
focused on assessing convergent validity, indicator collinearity, statistical significance, and the
relevance of indicator weights. Subsequently, the structural model was evaluated using three
criteria—collinearity, the model’s predictive power, statistical significance, and the relevance of
path coefficients. The analysis was performed using SmartPLS software, version 3.3.9 [40].
4. Results
The literature review results and analysis of the interviews already published [30] indicate
that blockchain-enabled digital transformation plays an important role in driving decentralised
public governance. The study highlights Kenya’s ongoing transition to decentralised governance
following its 2020 constitutional reforms, which introduced county governments. Despite
political and bureaucratic challenges, the responses from the study participants indicate that
digital transformation has already begun supporting the decentralisation of public governance
by improving the efficiency of government services, promoting transparency, and enhancing
citizen participation. For instance, the application of blockchain and e-government platforms
such as eCitizen and iTax enabled secure and efficient public service delivery, facilitating citizen
engagement and reducing administrative redundancies.
The interviews revealed several blockchain applications in Kenya’s public sector. For instance,
Kanya’s Land Registry System with the Hyperledger Fabric platform provides smart contracts for
title deed transfers, property ownership verification, land subdivision processing, and mortgage
registration. This has streamlined the service provided by different land registry offices creating
multiple channels. The academic certification system, an Ethereum-based Solution, is used for
smart contracts to improve the processes of certificate issuance, verification, and access control.
The application of blockchain in the agriculture supply chain was also found to enhance food
traceability and payments to farmers and ensure product quality. Using the VeChain platform,
this solution enables IoT integration (including temperature sensors, humidity monitors, and
GPS tracking), as well as smart contracts (automated payments, quality verification, and supply
chain milestones).
However, the findings also highlight that while Kenya’s public sector still lags behind the pri-
vate sector in digital maturity. While the ongoing technological advancements hold significant
potential for transforming governance, empowering citizens, and increasing public trust [30],
several organisational and managerial issues must be resolved to realise the anticipated benefits
of emerging technologies. The following sections present the result of the quantitative part of
the study, focusing on the relationship between our seven constructs—digital transformation,
organisational performance, digital strategy, organisational readiness, transformational leadership,
organisational agility, and stakeholder relationship.
The analysis started with estimating the path coefficients and assessing the collinearity
statistics. As we ran the PLS-SEM algorithm, we selected a path-weighing option with maximum
iterations of 10000. In the next step, we did a bootstrapping with the same maximum iterations
to calculate significance. The result of the PLS-SEM analysis is shown in Figure 2.
4.1. Measurement Model
At the beginning of our analysis, we computed variance inflation factors (VIFs) for each item to
assess the potential for multicollinearity among the formative indicators. As recommended by
Hair [41], a VIF value greater than 5 is generally considered indicative of a significant collinearity
problem. Our analysis revealed that none of the formative indicators exhibited a VIF value
exceeding this threshold, suggesting a negligible level of multicollinearity among the constructs.
This assessment is essential for ensuring the reliability and validity of our measurement model.
To evaluate the statistical significance and relevance of the indicator weights, we examined
the t-values associated with each weight. Our analysis revealed that 12 measurement items
exhibited t-values exceeding the 1% significance threshold of 2.576, indicating statistically
significant contributions to their respective constructs. Since the literature [41] cautions against
automatically discarding indicators with non-significant weights, we further assessed the
absolute contribution of all indicators to their constructs. The outer loadings of all formative
indicators were found to be greater than 0.50, confirming their substantial contribution to the
corresponding constructs. Given these findings, we retained all indicators in the measurement
model, and no collinearity issues were identified.
4.1.1. Structural Model
To evaluate the potential for multicollinearity among the predictor constructs in the structural
model, we calculated variance inflation factors (VIFs) for each construct. A VIF value exceeding
5 is generally considered indicative of a significant collinearity problem. Our analysis revealed
that none of the predictor constructs exhibited a VIF value above this threshold, suggesting a
negligible level of multicollinearity. This finding is essential for ensuring the reliability and
validity of the structural model [37].
In the second step, we evaluated the predictive power of our structural model by assessing
the R² values for endogenous constructs—digital transformation (DT) and organisational Perfor-
mance (OP). Partial Least Squares (PLS) estimation is based on the variance explained in the
model. The R² values, ranging from 0 to 1, indicate the proportion of variance in the endogenous
construct that is explained by its exogenous predictors [41]. According to established guidelines,
R² values of 0.75, 0.50, and 0.25 are generally considered to represent substantial, moderate,
and weak explanatory power, respectively. As shown in Figure 2, the result of the theoretical
research model indicates that the five exogenous predictors (DS, OR, TL, OA and SR) explain
the variance of digital transformation is moderately, i.e., 52.8%. The variance of the other
endogenous construct OP is explained by DT moderately, i.e., 67.2%.
Figure 2: Results of the theoretical research model evaluation.
Next, the path coefficients’ statistical significance and relevance were evaluated. Path coeffi-
cients explain the strength of the effect one variable has on another. According to Cohen [42],
the power of the prediction as measured by path coefficients might be strong (0.5 or higher),
moderate (higher than 0.3, but less than 0.5), or small (higher than 0.1 but less than 0.3). As
shown in Table 2 and Figure 2, all paths in the theoretical research model were found to be sta-
tistically significant, above the recommended threshold in the literature [42, 37]. This provides
strong support for our proposed theoretical model. However, the degree of influence among
the constructs varies, ranging from strong to moderate to small [42]. At first glance, the path
coefficients reveal that digital transformation in the public sector has a strong positive impact
on improved organisational performance. A more detailed examination of the relationships
between the five factors and digital transformation shows that transformational leadership and
digital strategy have a significant influence on the success of digital transformation in the public
sector. In contrast, organisational agility and organisational readiness demonstrate a moderate
influence on digital transformation success, while stakeholder relationships exhibit the least
impact.
5. Discussion and Conclusion
This study set out to contribute to the scant literature on digital transformation in the public
sector, focusing on a specific technology—blockchain—and how it can be used to support the
decentralisation of public governance. To answer the research question—How do organisational
and managerial factors influence the success of the use of blockchain to realise the benefit of digital
transformation in improving the performance of public organisations? —a mixed-method approach
was adopted. The findings highlight the significant role of digital transformation in supporting
the transition from traditional to decentralised governance. Consistent with the findings of the
prior studies [5], our interviewees in Kenya argue that blockchain-enabled digital transformation
has improved the creation of what Moore [43] referred to as public value. In contrast with
organisations in the private sector, scholars recommend measuring the performance of public
organisations in terms of citizens’ expectations met [24]. The responses from the qualitative
study indicate that decentralised public governance enabled by digital transformation and the
changes in legislation have resulted in the right direction towards meeting citizens’ expectations.
Particularly, the interviewees provided various examples of how decentralisation has improved
public value, e.g., operational efficiency, citizen participation, citizen empowerment, and public
trust [30].
The survey results indicate a strong causal association between digital transformation and
organisational performance in the public sector (β=0.652). The finding is consistent with the
findings of prior studies conducted in organisations in the private [44, 45, 46].
Table 2: Outcomes of the structural equation modelling analysis.
Hypotheses and path Path Coeficient (𝛽) P -Value Decision
H1: DT→OP 0.652 0.002 Supported
H2: DS→DT 0.533 0.000 Supported
H3: OR→DT 0.481 0.001 Supported
H4: TL→DT 0.683 0.000 Supported
H5: OA→DT 0.361 0.001 Supported
H6: SR→DT 0.224 0.011 Supported
In response to the how question, the findings of the study attempted to establish the organisa-
tional and managerial factors that determine the success of digital transformation. The analysis
establishes organisational readiness, digital strategy, transformational leadership, organisational
agility, and stakeholder relationships as factors influencing the success of blockchain-driven
digital transformation. According to the path coefficients, the influence of the three of these
factors was strong. Transformational leadership seems to be the most determinant factor affect-
ing digital transformation in the public sector (β=0.652). The finding supports prior studies that
found the role of transformational leadership important for digital transformation success (e.g.,
[19, 13]). Digital strategy was the second most important factor affecting the success of digital
transformation (β=0.533). The lack of robust digital strategies in the public sector is reported
in the extant literature [24]. Researchers in the application of blockchain in the public sector
have also found digital strategy to be a critical success factor. In third place, organisational
readiness was an important determinant of successful digital transformation, consistent with
prior research on blockchain adoption [4, 2].
On the other hand, the study puts organisational agility (β=0.361) and stakeholder relationship
(β=0.224) at the bottom of the list of determinant factors influencing digital transformation
success. This is interesting, given the recognition of stakeholder relationships as one of the
important issues supporting the co-creation of public value within the context of public organi-
sations [25]. Our interviewees also acknowledge the significance of consulting and interacting
with multiple stakeholders to serve or co-create value for citizens. Moreover, empirical studies
in Europe [7] indicate that blockchain adoption in public organisations is likely to succeed with
less stakeholder complexity.
This research offers valuable insights into the factors influencing the adoption of blockchain
technology and its subsequent impact on the overall success of digital transformation in the
public sector. The strong positive causal relationship between the studied constructs underscores
the importance of allocating resources to pursue the adoption of emerging technologies with
the aim of improving organisational performance. Thus, understanding these factors’ varying
degrees of influence can inform strategic decision-making.
It is essential to interpret the findings of this study within the context of its limitations. To
start with, the cross-sectional nature of the survey data limits the ability to establish causal
relationships over time. Longitudinal studies could provide a more comprehensive under-
standing of the dynamics of the introduction and integration of new technologies as part of
the continuous digital transformation journey undertaken by public organisations. Moreover,
managing blockchain and other emerging technologies in pursuit of digital transformation in
today’s dynamic environment presents significant challenges. Thus, evaluating the influence
of the factors discussed within the context of changing internal and external environments
could offer valuable insights for practitioners. Moreover, the sampling strategy employed in
this study also warrants consideration. The non-random selection of respondents may have
introduced potential biases that affected the findings of the study. Additionally, the cultural
context of Kenya might have influenced the responses, necessitating further research in similar
public organisations in other countries/regions.
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