Size Matters in Municipal Digital Transformation: Insights from local government survey in Japan

We analyze the current status and challenges of municipal digital transformation (DX) based on data from an original questionnaire survey, showing that progress in DX has so far remained at a low level, with small municipalities lagging behind. Many factors hinder DX; these include lack of expertise, difficulties in internal human resource development, and many written procedures. Smaller municipalities face hardware limitations, such as inadequate IT equipment and security systems. Our empirical results suggest that municipal DX at the introductory stage is expected to improve the quality and efficiency of public services through the digitization of administrative procedures and automation. DX in the later stage, in which municipalities adapt their workflow or organization to the digital environment, is conducive to teleworking, data-driven decision making, evidence-based policy making, and proliferation of DX in the local industry from the perspective of industrial policy.