Digital Governance as a Strategic Engine for Reaping Financial Performance: Evidence from the Global Healthcare Segment

Digital government initiatives have become a central feature of contemporary governance, reshaping institutional environments and influencing firm behavior across industries, including the global healthcare sector. The study empirically examines the effects of e-government development on healthcare firms’ performance across countries, with liquidity serving as a mediating variable. Grounded in institutional theory, transaction cost economics, and the resource-based view, the analysis assesses how variations in digital governance environments influence firm-level financial performance. Using an unbalanced panel of 14,942 firm-year observations from healthcare firms across 74 countries over the period 2016–2024, the study employs fixed-effects panel regressions to assess the effects of the E-Government Rank, E-Government Index, and E-Participation Index on return on assets. The findings reveal that e-government development exerts heterogeneous effects on firm performance. Higher numerical E-Government Rank (EGR) values are positively associated with firm profitability but negatively associated with liquidity, indicating that a deterioration in relative digital-governance standing corresponds to higher profitability and lower liquidity. Conversely, higher e-government index scores enhance liquidity, which in turn improves performance, suggesting a potential liquidity-mediated relationship. E-participation shows no direct performance impact, though liquidity remains a critical channel, particularly for smaller firms. Overall, the results highlight liquidity as a key transmission mechanism through which digital governance influences healthcare firm performance. The study offers important implications for policymakers and managers seeking to leverage digital governance reforms for sustainable healthcare sector development.