Does High Cybersecurity Capability Lead to Openness in Digital Trade? The Mediation Effect of E-Government Maturity within Cross-border Digital Innovation

Abstract

Cyber-security risks are bringing new threats to digital trade, the cross-border transactions enabled by digital technologies. Governments are implementing fragmented, in-flux cyber-security policies to regulate digital innovations. Organizations need to understand such a trend to align their global digital strategy. The lack of common understandings of cyber-security within cross-border digital innovations, however, raises an increasing debate about whether and how cyber-security capability building policies can impact digital trade restrictions. To answer this question, this study develops a National Cyber Trade Behavior model to examine the relation between national cyber-security capability and digital trade restrictions. Utilizing the PLS-SEM based path analysis, we draw empirical evidences from 46 countries, which represent more than 80% of international trade in services, to verify the developed model. The results reveal that building cyber-security capability can help to create an open digital trade system, not directly but mediated by E-government maturity. Beyond the theoretical contributions for information systems, digital trade, and e-government discipline, this study develops a governance framework for a secure and open digital trade system, and also supports business to effectively evaluate policy risks to align their global strategy with cross-border digital innovations.

Keywords: Cross-border Digital Innovation, Digital Trade Restriction, Cybersecurity Capability Building Policy, E-government Maturity, Global Digital Strategy