Building the Virtual State: Information Technology and Institutional Change

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The benefits of using technology to remake government seem almost infinite. The promise of such programs as user-friendly "virtual agencies" and portals where citizens can access all sections of government from a single website has excited international attention. The potential of a digital state cannot be realized, however, unless the rigid structures of the contemporary bureaucratic state change along with the times.

Building the Virtual State explains how the American public ...

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Overview

The benefits of using technology to remake government seem almost infinite. The promise of such programs as user-friendly "virtual agencies" and portals where citizens can access all sections of government from a single website has excited international attention. The potential of a digital state cannot be realized, however, unless the rigid structures of the contemporary bureaucratic state change along with the times.

Building the Virtual State explains how the American public sector must evolve and adapt to exploit the possibilities of digital governance fully and fairly. The book finds that many issues involved in integrating technology and government have not been adequately debated or even recognized. Drawing from a rich collection of case studies, the book argues that the real challenges lie not in achieving the technical capability of creating a government on the web, but rather in overcoming the entrenched organizational and political divisions within the state. Questions such as who pays for new government websites, which agencies will maintain the sites, and who will ensure that the privacy of citizens is respected reveal the extraordinary obstacles that confront efforts to create a virtual state.

These political and structural battles will influence not only how the American state will be remade in the Information Age, but also who will be the winners and losers in a digital society.

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Editorial Reviews

From the Publisher

"One can only hope that practitioners and policy analysts read this book as the war on terrorism proceeds and agencies are increasingly forced to deal with Internet technologies." —E. Lewis, New College of the University of South Florida, Choice, 3/1/2002

"[P]rovides a powerful theoretical lens for understanding how technology, organizations, and institutions interact.... I strongly recommend this book to anyone seriously interested in the role of technology as both cause and effect of organizational and institutional change." —Stuart Bretschneider, Syracuse University, Public Administration Review, 11/1/2003

"[Fountain's] book is a thorough, well-integrated scholarly assessment of American government's administrative and managerial response to dramatic changes in information technology over the past two decades.... an important book that brings technology into the mainstream of public management theory." —Sharon S. Dawes, State University of New York at Albany, Journal of Public Administration Research and Theory, 10/1/2002

"This important study brings institutional theory and the adoption of Internet technologies by the modern state into sharper focus than any previous work....Highly recommended for undergraduate and graduate collections in public administration, management, sociology, and political science." —E. Lewis, New College of the University of South Florida, CHOICE, 6/1/2007

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Product Details

  • ISBN-13: 9780815700784
  • Publisher: Brookings Institution Press
  • Publication date: 8/1/2001
  • Pages: 256

Meet the Author

Jane E. Fountain is associate professor of public policy at the John F. Kennedy School of Government at Harvard University. She is a research member of the Internet Policy Institute and director of Women in the Information Age Project.

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Read an Excerpt

Building the Virtual State

Information Technology and Institutional Change
By Jane E. Fountain

Brookings Institution Press

Copyright © 2001 Brookings Institution Press
All right reserved.

ISBN: 0815700784


Chapter One

Introduction

This book deals equally with the Internet and with institutions, the latter a dominant concern of political and social thought since antiquity. In governments around the globe, from Indianapolis to India, from San Francisco to Singapore, from Chile to China, policymakers view the Internet either as a force to increase the responsiveness of government to its citizens or as a means to further empower the state. In developing nations, new wireless information and communication technologies signal an unprecedented opportunity to hasten the pace of development and connection to the developed world. A marked increase in the growth of transnational financial, legal, and regulatory systems-made feasible by the Internet-has raised serious debate about the future, the location, and the structures of governance. In authoritarian regimes, the Internet threatens domination by the state over information and communication but at the same time, paradoxically, serves as an instrument of consummate state surveillance and control over society. The choices we face in the present regarding the use of digital tools and the institutional arrangements in which they are embedded willinfluence the way governments work around the globe during the next century and beyond.

The analytical framework I advance extends and refines institutional theory to encompass recent fundamental developments in information technologies. This intellectual territory lies virtually uncharted by institutional theorists in political science, sociology, and economics or in the related practical fields within public policy and management and organizational behavior. As the use of the Internet unfolds, questions central to institutional thought persist with increasing force. How are bureaucratic policymakers using networked computing? Are they negotiating new institutional arrangements as a consequence? To what extent and in what ways are they constrained by current institutional arrangements? What extensions of institutional theory are necessary to take account of fundamental change in organizational communication, coordination, and control? My purpose is to advance theory to inform answers to these questions. By clarifying and extending concepts and relationships, central tasks of theory-building, this book also contributes to practice.

Enter the Virtual State

A key phase of the Internet's impressive growth began in 1993, coinciding with the initial period of a major government reform effort, the National Performance Review, led by Vice President Al Gore. Having focused initially on developing regulatory and legal regimes conducive to e-commerce, the government then turned to the task of building digital government, in part through the strategy of creating virtual agencies. The virtual agency, following the web portal model used in the economy, is organized by client-for example, students, seniors, small-business owners, or veterans; each site is designed to provide all of the government's services and information from any agency as well as links to relevant organizations outside government. Web portals, extending to government the business concept of 7 x 24 x 365 (being available seven days a week, twenty-four hours a day, 365 days a year), would restructure the relationship between state and citizen to be simpler, more interactive, and more efficient. A virtual state (my term) is a government that is organized increasingly in terms of virtual agencies, cross-agency and public-private networks whose structure and capacity depend on the Internet and web.

Cost savings, although sizable in many instances, have not been emphasized during these early efforts. Yet they are potentially enormous. The U.S. Department of Commerce estimates that the cost to the government of processing a payment would be reduced between $1.65 to $2.70 for traditional administrative processing and from $0.60 to $1.00 for web-based processing. Public agencies process hundreds of millions of paper-based transactions annually in the form of bill payments and document submissions and could achieve similar efficiencies across a range of transactions. The Department of Education services approximately 20 million student loan accounts. It pays a contract fee of twelve dollars per toll-free telephone call for access to student account information in the department's central processing system, which stores the database of Title IV student aid, student loan origination, and aid disbursement to schools. Web-based queries to this database cost only a few cents.

Movement from paper-based to web-based processing of documents and payments typically generates administrative cost savings of roughly 50 percent-more for highly complex transactions. This figure ignores additional savings of money, time, travel, and effort to citizens and intermediate institutions. The sum of the following transactions with government-birth registrations; elementary, secondary, and college enrollment; motor vehicle registration and inspection; voter registration; construction permits for new housing; and patent and trademark applications-was nearly $443 million per year in 1999, according to the U.S. Census Bureau. The sheer volume of government transactions suggests the enormous savings electronic transaction processing alone could provide.

Forrester Research, a private research firm, predicts that by 2006 governments at the local, state, and federal levels will receive 15 percent of their total collections, or $602 billion, over the web. This figure is significant not only for its impressive size, but also because private vendors and e-government providers typically charge a percentage fee for each transaction. Thus digitizing government can create a particularly lucrative new market. If no other pressure for electronic government existed, the market potential for businesses alone would move digitization forward. By the summer of 2000, nearly every federal agency and most state and larger local governments provided information and some services on the web. The median number of web-based state government services was four. Forms may be downloaded and taxes filed electronically, professional licenses obtained or renewed digitally, and state employment databases, sex offender registries, and government contracts searched online.

The web's potential to support more efficient procurement means government benefits financially and administratively. In fiscal year 1999, U.S. government expenditures at all levels for procurement equaled $584 billion, of which $177 billion was federal defense spending. Many large firms using web-based procurement to put supply chains on the web gain transparency and improve markets. Some have reported savings of 20 percent annually from use of the web for business-to-business exchange, although more recent estimates are smaller. Similar government savings are estimated to yield nearly $117 billion per year.

In addition to the development of web-based government-to-citizen (G2C) services and government-to-business (G2B) digital procurement processes, development of government-to-government (G2G) connectivity promises to yield significant benefits. Agency autonomy, competition, and lack of interoperability ("stovepipes") have long hampered coordination, slowed communication, and diminished opportunities for joint policy problem-solving in government. Open standards and protocols on the Internet allow all computers to be connected, resulting in the remarkable connectivity, size, range, and richness of the web. Yet the technical infrastructure for linking the computers of the government is no substitute for the institutional infrastructure required to support coordinated practices, procedures, cultures, incentives, and a range of organizational, social, and political rule systems that guide behavior and structure agencies.

The major challenge for government is not the development of web-based G2C transactions but reorganizing and restructuring the institutional arrangements in which those transactions are embedded. Policymakers have barely contemplated integration or reorganization behind the web, in the bricks and mortar of government. Moreover, it is clear that the current information infrastructure in most government agencies could not support e-government at any appreciable level, meaning that the Internet alone cannot interconnect agencies and the public. The initial euphoria that greeted e-commerce has been replaced with a growing awareness of the painstaking and painful organizational and industry restructuring that will be necessary to further exploit the coordination, control, and communication potential of the Internet. Government is following a similar trajectory. Unlike private firms, however, government reorganization is far more difficult and highly political because of the embeddedness of agencies in long-standing institutions. The reorganization of government as a consequence of the Internet signals an institutional transformation of the American state.

These reform challenges demand scholarly inquiry. This book seeks to break new ground by incorporating networked computing into institutional perspectives on governance and organizations. The intellectual precursors of this study are firmly situated in three broad streams of theory and research rooted primarily in political science, organizational and economic sociology, and studies of technology and organization.

The first stream, the study of governance, has been inextricably linked to institutions since antiquity. Robert Dahl observed: "That the character of a regime and the qualities of its people are somehow related has been a commonplace of political philosophy since the Greeks." Aristotle argued that effective democratic institutions are intimately connected to the social and economic development of the demos. Plato, in the Republic, noted that similar institutions of governance vary depending upon the cultural characteristics of the citizenry. In the mid-nineteenth century, as constitution building in the nation-states gained impetus, John Stuart Mill sought to devise the institutional structures and processes of representative government that would protect individual rights and interests.

More recently, interest in institutions has encompassed a range of overlapping and, at times, competing research programs. Robert Putnam has furthered our understanding of the relationship among democratic institutions, politics, and social capital. James March and Johan Olsen have contributed to institutional thought by delineating both rational choice and boundedly rational organizational bases of politics. Robert Keohane and Joseph Nye have argued that realism in international relations fails to account for the effects of complex interdependence, international institutions, and the importance of "soft power." International relations scholars have long examined the underpinnings of international regimes that govern in the absence of overarching authority. Historical and comparative studies of government institutions, particularly those that examine the autonomy, capacity, and development of the state, have emphasized the political conflict and negotiation underlying institutional change and development as well as the strong effects on development of history, culture, and structural inertia.

Other political scientists and sociologists have used an institutional lens to examine individual and organizational relationships and behavior in the policymaking process. Researchers in this stream tend to focus on policymaking as it is actually carried out by individual and organizational actors rather than on more formal models of legislative or interest group behavior. As Hugh Heclo observed, political sociologists have attended to the social relationships and social conditions that lead to public policies and the effects those policies have on social structure. Political scientists cast their analytical gaze on the political relationships, political forces, and political effects of policy. Yet public managers and other government actors are both social and political. The analytic distinctions are imposed on the phenomena. The organizational, and more structural, variant of this mode of inquiry is perhaps best exemplified by Edward Laumann and David Knoke in The Organizational State, which views policymaking from the perspective of constellations, or networks, of public, private, and nonprofit organizations.

The second broad stream from which this book draws is the new institutionalism in organizational theory and sociology. At the turn of the twentieth century, Emile Durkheim, the founder of sociology, defined it as "the science of institutions, of their genesis and of their functioning." John Meyer, Richard Scott, and Brian Rowan have explained the roles of symbols and rituals in institutions and their relationship to legitimacy. Paul DiMaggio and Walter Powell accounted for similarities in organizational forms and practices within organizational fields not as the result of rational choice but more often as the product of institutional isomorphism, processes by which organizations in a given field conform to normative influences, mimic others, or are coerced by powerful actors in their environments to adopt practices. Other sociologists incorporate self-interest and incentives into institutional analysis to construct a choice-within-constraints framework that overlaps substantially with the new institutional economics.

Mark Granovetter, in a seminal article published in 1985, argued that economic action is embedded in ongoing social structures and social relations. His clear conceptual account of embeddedness in institutional and economic life reinvigorated a long-standing but dormant line of research in economic sociology. Embeddedness, according to Granovetter, affects both individual action and institutions. His approach sought a "third way" between "an atomized, undersocialized conception of human action [developed] ... in the utilitarian tradition" and an oversocialized conception of the individual as one who has internalized norms and obligations to such an extent that terms such as "interests" and "choice" lose meaning. Subsequent research has further developed the antecedents, characteristics, and outcomes of embedded network relationships, explored the mechanisms by which networks and embeddedness influence economic behavior, and explored the links between institutions and networks.

The third major stream of research informing this book considers the relationship between information technologies and organizations. Max Weber recognized clearly the rapid development of bureaucracy in the nineteenth century as a response to the industrial revolution. Bureaucracy was needed to control decentralized, complex operations and to coordinate rail transport. He explained bureaucracy as a technology of control through its structuring of information into cases and channels, its strict reliance on impersonal relations, and inevitable tendency toward rationalization. More recently, Alfred Chandler, the business historian, traced the evolution of the modern corporate form and its practices. James Beniger has placed the "information revolution" in more than a century of efforts to gain speed and control over material processing. He argued that developments in computing typically respond to crises of control. JoAnne Yates traces the dominant modes of managerial communication in complex organizations to their roots between 1850 and 1920 as written, formal communication subsumed earlier, less formal means. Stephen Barley has explored the relationship between information technology (IT) and the organization of work. Other researchers also have focused on the social and structural mechanisms by which individuals and organizations use new information technologies and on the effects of information technology on organizations and the design of work.

This book seeks to integrate and to refine and extend research in these three broad streams. With few exceptions, little detailed inquiry on embeddedness and the role of networks has been conducted on government organizations and institutions. Laurence O'Toole has observed that public management "increasingly takes place in settings of networked actors. ... Yet the standard writings to which most administrators turn for advice to improve performance devote relatively little attention to acting effectively in such situations." Networked arrangements in government are prominent and likely to increase. The federal budget appropriates only a small proportion of the total to single-agency programs; nearly all major federal policies require a constellation of public, private, and nonprofit organizations. Researchers have used the term "the hollow state" to denote that government increasingly takes place in the private and nonprofit sectors. This book seeks to extend research on embeddedness and networks to better align research with current phenomena.

(Continues...)



Excerpted from Building the Virtual State by Jane E. Fountain Copyright © 2001 by Brookings Institution Press
Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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Table of Contents

Preface
Ch. 1 Introduction 3
Ch. 2 Leveraging Cyberspace to Reinvent Government 18
Ch. 3 Networked Computing 31
Ch. 4 Bureaucracy 44
Ch. 5 Interorganizational Networks 64
Ch. 6 Enacting Technology: An Institutional Perspective 83
Ch. 7 The International Trade Data System 107
Ch. 8 Enacting the ITDS 129
Ch. 9 A Virtual Agency for Business 147
Ch. 10 Command and Control in Cyberspace 167
Ch. 11 Conclusions 193
Notes 207
Index 243
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