Village government's financial system: Investigating the impact of the technology–organization–environment (TOE) framework on performance, accountability, and transparency

Given Indonesia's geographical configuration as an archipelago comprising 81,616 villages, effective monitoring of village government financial management poses significant challenges. Despite the mandatory implementation of the Village Financial System (VFS) to facilitate this monitoring, a decade into its rollout, not all village governments have adopted the system effectively. This research aims to investigate the antecedents of VFS adoption by developing a comprehensive model grounded in the Technology–Organization–Environment (TOE) framework. The framework encompasses technological factors (relative advantage, compatibility, and complexity), organizational factors (top management support and organizational readiness), and environmental factors (government regulation and citizen demand). Furthermore, the study examines the impact of VFS adoption on governance outcomes, specifically performance, accountability, and transparency. Using village governments as the unit of analysis, the research involved 215 respondents, with data collected via a questionnaire survey. Hypotheses were tested using the partial least squares method. The findings indicate that relative advantage, compatibility, top management support, organizational readiness, government regulation, and citizen demand positively influence VFS adoption, while complexity does not. Additionally, VFS adoption is found to significantly enhance performance, accountability, and transparency in village government operations. This study contributes to a better understanding of VFS adoption by the central government, underscoring its role in improving public governance. It also offers insights into the broader challenges of e-government implementation, highlighting the importance of aligning technological, organizational, and environmental factors for successful information system adoption.