Electronic commerce and electronic democracy: two sides of a coin

Karin Geiselhart

Post-Doctoral Research Fellow in Electronic Commerce

School of Business IT

RMIT University

Paper for presentation at the Communication Research Forum, Old Parliament House, Canberra, October 4-5


The most overt form of telecommunications convergence is the melding of broadcast media and online services. Opportunities to chat with reporters after the show and recipe databases are undoubtedly precursors of future hybrid forms. Such innovations are mainly driven by the commercial sector. Media content providers have been quick to realise the importance of value-added information as they search for ways to cash in on electronic commerce. This complements the savings in transaction time and staff, and the value of additional electronic data capture that is driving business to business electronic commerce.

Ironically, government examples of online interactivity for citizenship trail well behind. This irony might be lost on those who think electronic service delivery is the alpha and omega of government online. First world governments have been relatively good at applying the efficiencies of electronic commerce to their services, but have not generally considered the potential benefits from similar approaches in the policy area. They have not reached for the democratic dividend. A transaction approach to government electronic commerce places borders around the role of government information and the possible interfaces with strategic participation. It also limits the scope for the kinds of value-adding and citizen feedback that can actually make government run qualitatively better, not just quantitatively quicker or cheaper.

This paper discusses the relationship between electronic democracy and electronic commerce, and argues that they are two aspects of the emerging paradigm for the information society. It will start by outlining what each of these terms means, and how they apply to a range of essential activities for both governments and businesses. It will then consider the stages of e-government, and suggest some avenues for exploring how these can lead to better governance.


The term ‘electronic commerce’ has achieved somewhat of a cult status in recent years. Every business seeks to partake of the promised benefits of the ‘New Silk Road’, as several government reports have dubbed the information superhighway. A workable definition of electronic commerce is ‘the undertaking of normal commercial, government, or personal activities by means of computers and telecommunications.’ (Chan and Swatman 2000)

Electronic democracy, on the other hand, refers to the ways interactive technologies can contribute to the processes which underlie democracy. These are outlined generically by Dahl (1989) as effective participation, voting equality at the decisive stage, enlightened understanding, and control of the agenda. Access to adequate and diverse sources of information is a necessary prerequisite for enlightened understanding. This would include information necessary for the auditing and evaluation of decisions. Roughly, these processes create ‘governance’, another term which has grown in popularity. Governance applies to all kinds of associations, not just elected governments, and in its broadest use refers to any system of authority, control or management. Thus, electronic democracy might include electronic voting, but is much broader than that. A trivialised approach to electronic voting, which may be thought of as the Oprah Winfrey model, has been discussed elsewhere (Calabrese and Borchert 1996, Nieuwenhuizen 1997).

The dictionary gives an ‘obsolete’ meaning of commerce as ‘intellectual exchange’. This meaning may actually be quite current, as it captures the sense of information sharing and negotiation which preceeds any decision. It also shows the convergence between the concepts of electronic democracy and electronic commerce: quite simply, each involves a great deal of information and intellectual exchange, where true value adding is stored, before arriving at a decision point. Whether that is a transaction such as casting a vote or buying a car, or taking a new policy direction, what happens prior to that point is of crucial importance.

Placing the ubiquituous ‘e’ before the concepts of commerce, governance or democracy therefore opens a wider discussion about their differences and intersections. The focus here will be on ways that governments can expand their use of electronic technologies to provide a democratic dividend. I will argue that achieving this is fully compatible, indeed necessary, for achieving efficiencies and cost-savings.

E-commerce in government

Governments from Korea to Kalgoorlie are setting up electronic commerce units. Entire conferences are devoted to the techniques and case studies that are making government processes more cost effective and convenient for their transactions with citizens and businesses. Rather than providing additional examples of these projects, I will build on an existing outline of their main directions. In a June feature article for The Economist, Mathew Symonds gives four stages of e-government. The first is one-way information provision via a web page. The second allows citizens to update information, such as a change of address. The third is more sophisticated, and allows actual transactions, such as renewing a licence or paying rates. The final stage is an integrated portal that theoretically allows all government services to be handled online, ideally with ‘24/7’ interactivity. Many Australian governments, from the local through to the federal, are already at stage three and planning for stage four. Citizen convenience is probably less of a motivator than cost savings, but both are positives. The main negative, as many ambitious planners have discovered, is that implementing good electronic service delivery is not cheap. The goal of a people-free process, from a staffing perspective, is not realistic, and budgeting for the maintenance of new systems is sometimes overlooked.

Before noting what is left out of the above progression, it is important to acknowledge what is achieved at each of Symonds’ four stages of integration, from both an administrative and a more strategic public policy perspective. The policy level is much less developed electronically (Gualtieri 1998, Geiselhart 1999). A critical rider to the following analysis is that all benefits are maximised when there is full connectivity. The holy grail of 24/7 needs to be thought of a two way street. Without access to both the technology and the requisite skills to use it, the information superhighway lacks cars and drivers. Extended concepts of universal service are currently being widely debated (see, for example, Kling 2000) and no consideration of either government electronic service delivery or electronic commerce is complete without considering it explicitly.

Stage one, the provision of information, can make government more efficient and accessible by providing more information, easily updated, and dealing with repetitive questions. It can filter and divert more complex enquiries. Sophisticated techniques can send an email to the right place, where hopefully an informed staff member will be able to respond in a timely and adequate manner. One example is the Commonwealth/Tasmanian Government Information Centre. This innovative and integrative project should yield significant efficiency and savings benefits. Currently, it operates as a call centre and only offers referrals to information, but there is potential for expansion of this service.

On a policy level, more information, if adequately indexed and managed, can provide an additional dissemination source. It can also assist analysis via online searching for key words. Information alone can increase transparency and indirectly, accountability, but it can not by itself foster participation.

At stage two, citizens can provide information about themselves. This has clear benefits by cutting down on paper and fax transfer, and eliminating the re-entry errors and staff intensive paper shuffling that characterise most bureaucracies. Electronic data capture paves the way for integrating the business value chain. The provision for citizen input also has applications for policy development. Posting discussion papers and eliciting comments has become common. Less common is the full transparency of posting all comments.

Stage three becomes transactional, allowing for payments and a whole range of legally binding exchanges. At this point, the efficiencies of stage two accelerate, and enormous cost savings are possible. The data stream created also can provide the feedback about how to fine tune, expand or improve online services. As online marketers have been quick to notice, these sources of user data are expensive to obtain through traditional research methods.

Policy exchanges could also become much richer at this level of interactivity. This is an area which has hardly begun to be explored by Australian governments at any level, but is more developed in the US. There are several ways to approach this. One follows the broadcast model, by placing a hearing or meeting on the Internet, possibly as a video stream. Another model is to make all contributions available for mining at the site where the public proceedings are posted, to create a ‘public participation portal’ (Osborn 2000). Business to consumer sites are increasingly adding breadth and depth to the kinds of information they provide. For example, the bluenile.com jewellery site bills itself as providing ‘education, guidance, diamonds and fine jewellery’, and offers a choice of a toll free telephone number or an email address for questions.

It is just a matter of time before government agencies will feel themselves pressured to provide similar levels of service, and probably more. As monopoly providers, government has been somewhat insulated from the need to be truly responsive to its customers. This is balanced, however, by the need to make savings to balance the budget.

This brings us to the final stage in Symonds’ hierarchy of electronic government: the integrated service portal, where a plethora of diverse back end and legacy systems are elegantly integrated into a unified and user friendly front end. Unfortunately, such achievements are harder to attain than to dream about, and highlight the similarities and differences between government and the private sector.

The often intense territoriality that can exist between government departments (and their ministers) can impede the effective integration of services, likewise differences in resources and IT systems. Indeed, these issues are often encountered, as fractal echoes, on a smaller scale within companies and individual agencies. Many an intranet has been slowed in this way. But unlike the private sector, government is not as driven by the bottom line of profits. Service provision and government benefits are often aimed at the less affluent. This builds in additional complexities and contradictions for web-based services, given that the less affluent have more limited access to the web. Here, too, a certain convergence between government and the private sector is evident, as companies and accounting firms embrace the ‘triple bottom line’ of financial, social and environmenal sustainability (see Institute of Chartered Accountants in Australia), and governments set up profit centres.

The Australian Business Entry Point (BEP) is an example of a portal trying to offer one-stop service, in this case to those wanting to do business with the Commonwealth. It offers much information, and even facilities for some registration and verification. An attached site tells more about the workings of the BEP and its associated committees. However, there is noticeably no provision for dialogue with government, or even links to peer-to-peer opportunities for communication. The provision of a set of links to related mailing lists or newsgroups, such as is provided on the Queensland Women’s Policy site, would add a dimension of interactivity and value that would transcend what is otherwise an advanced stage three effort. Thus, even a reasonably sophisticated effort has overlooked the potential for full s the policy aspect of interactivity, in favour of information provision. This includes information about policy, but not the opportunity to participate in shaping policy.

The Singapore e-citizen centre is probably the current outstanding example of a public information portal. Singapore has been leading the way towards the information society for some time, and they have a heightened sense of what they have achieved. Of note is the pride evident in the description of the dual entry points to the e-citizen centre: high speed entry for Singapore one users or low bandwidth for Internet users. With some justification, Singapore sets itself apart from all those who merely use the Internet. The e-citizen portal offers a wide range of services, categorised according to life issues: getting a job, travelling, taking a trip overseas. Information and transactions are then available, with a pleasant and clear interface. This is the same pleasantness and clarity that struck this observer about Singapore as a whole on a visit in June. This project is hardly an aberration. Rather, it grows from a widely publicised, concerted and long term vision of Singapore as an intelligent island.

However, as successful and impressive as the e-citizen centre might be as an example of stage four e-government, it is not a public participation portal. The feedback mechanisms are quite structured, and do not provide for dialogue or input into the policy process. True, other agencies of the Singapore government encourage input into policy issues, notably the Information Development Agency. And it might not be appropriate to place citizens in a situation where options for discussing urban transport design are pushed at them every time they look up a bus time table. A well planned participation portal would be distinct, and ideally independent of, although developed in collaboration with, government, the private sector, and the non-government sector. Clift (1998) describes this independent participatory hub in some detail, based on his experience with the Minnesota e-democracy project and other online democracy initiatives.

Within Australia, Whittlesea Council on the northern fringe of Melbourne is close to launching their e-service project. This is a well-developed example of stage four e-government, and offers transactions and user-customised perspectives, along with integration with a geographical information system (GIS).

Beyond stage four lie wider collaborations such as the possibility of procurement portals. This would again follow private sector examples of e-commerce.

Overall, the above four stage model of e-government does not generally provide much of a democratic dividend from IT. The service delivery model has clear limitations. Even at the highest level, the integrated information and transaction portal, the efficiencies are quantitative and incremental. The service delivery perspective overlooks the opportunity for truly transforming or reinventing government. As will be argued in more detail through the examples below, a deeper reinvention is closely aligned with the kinds of learning and rapid adaptation that will distinguish the winners from the losers in the global survival stakes. This paper cannot address the wider issues of globalisation. The relation between globalisation and governance is considered in some depth by Friedman (2000). In the comparatively less complex area of electronic commerce, the most successful firms are predicted to be those that add value by transformative new combinations of information, rather than simply achieving transaction savings (Galloway and Adam 2000 present this scenario in relation to Australian online property markets).

A well-known public administration theorist, Frederickson, said that public administration is becoming a branch of political science. He said this shift is being propelled by the ‘disarticulation’ of the state, characterised by an erosion of the capacity of jurisdictions to contain or manage complex social, economic and political issues (Frederickson 1999).

His analysis is correct as far as it goes, but he leaves out a discussion of the role of information systems in addressing some of these issues. Indeed, the growing role of information technology in government has been mostly overlooked by public policy theorists, at least in Australia. This no doubt reflects the disciplinary fragmentation and territoriality of many academics. One leading Australian academic once explained this oversight to me honestly: ‘I don’t know anything about IT.’

The failure to consciously seek a ‘democratic dividend’ from information systems is related to a need to rethink what democracy what mean in an information age. Most professions, but especially legal and regulatory systems, are being confronted by scores of issues that are beyond the capacity of the current framework to address adequately. The Chief Justice of Victoria, John Phillips, discussing the need for judges to have formal training (ABC Radio National, July 28, 2000) said there are two areas where even judges need some assistance: the use of new technologies in the courtroom, and e-commerce issues. Both of these relate to information technology, and through it, the ways we govern ourselves. These are turbulent times, and the mechanisms for self-government that were developed in an age when the speed of communication was limited by the speed of physical transport will not satisfy the needs of an interconnected world. If nothing else, the need for speed highlights the inability of our standard systems to meet the demands of a networked world.

Several examples will illustrate the ways that new technologies can not just speed up older processes, but transform them in ways that support democratic process. Dahl’s criteria for democratic process given above are still valid, but how these are realised in an IT rich world has yet to be fully explored. These examples come from areas close to both government and the private sector, and show again the increasing convergence of these domains. They may help address the question: what is the role for government in an interconnected, outsourced democracy?

The first example comes from the legal field. The crimenet.com.au site is, as of late July 2000, under review. It is assembled from publicly available information about missing persons, stolen property, etc. There are concerns that parts of it, such as newspaper reports, may not be correct and/or might prejudice jurors. Given the level of controversy, government has several choices. It could respond by shutting down this attempt to gather and re-package information. This could be problematic, given the public sources of most of the information. An alternative is to create new laws about the legitimacy of web sites and the verification of their data. Yet another approach would be to encourage a more pluralistic form of self-regulation, by encouraging the ‘airing’ of the site via the kinds of feedback and transparency and discussion that are the hallmarks of the non-government non-commercial precincts of the online community. None of these options would necessarily be free from further controversy or litigation, and perhaps a combination is required. The point is simply that there is a need to consider and discuss and trial a variety of solutions, and thereby clarify and articulate the mutual rights and responsibilities that will support democratic process in our brave new information society.

A second example comes from the hybrid area of online marketing and health infomatics. The current government approach, as set out in a report prepared for the Department of Communication, Information Technology and the Arts (DoCITA) is based on principles of efficiency and service delivery. While it notes that the applications of IT to the health sector now go beyond transactions, the extra uses seem to include only ‘clinical, educational and administrative purposes’. These are certainly important, and come under the stated goals of redesigning information management practices, delivering better health services and the expansion of markets for Australian online health services. These are consistent with a wider goal: improving both the services and accountability of the health sector by creating more transparency and public discussion about health issues. The provision of online patient discussion groups has been found to have positive outcomes (Feenberg 1995). Perhaps it would benefit the entire sector if government encouraged or facilitated the creation of data warehouses that allow searching on quality of care and treatment outcomes. There is an implicit move in this direction, with the publication online of sanctions in relation to aged care facilities. While government information should be made available, it is not necessary (or perhaps even desirable) that government establish the mechanisms for their examination. This might be more effectively provided by the private sector, with government setting the guidelines for quality, privacy protection, complaint handling and accessibility.

Overall, new electronic technologies allow for more comprehensive forms of transparency, and also for innovative, and rapid dialogue between stakeholders, government, and service providers, both public and private. Friedman (2000) argues that this sort of openness of financial markets not only drives globalisation, but forces governments into more responsible behaviour.

Such approaches may not be optional if the nation state is to survive. An officer with the Australian Taxation Office believes that the Internet will make income tax virtually uncollectable, as sophisticated techniques for money transfer and opacity become more ‘democratically’ available at low cost to tradesmen and wage earners. Only concerted international collaboration, with extensive automated monitoring of transactions, would begin to address this. Jurisdictional and privacy issues make such solutions unlikely in the short term. This is yet another area in need of widespread awareness, along with active deliberation.

At another level, the forms of collaborative information sharing and problem solving that characterise the best online learning experiences may apply equally to the complex and often controversial issues which face governments. The ability to articulate problems and reach consensus on possible solutions and then rapidly refine those solutions may ultimately be as critical to governance as the integration of service delivery.


This paper has looked at the service delivery model for electronic government, and argued that it is an incomplete for supporting democratic processes in an information age. Obtaining a ‘democratic dividend’ from government information systems and their strategic and regulatory frameworks is not just a theoretical enhancement to be thought about. It may well impact on the ability of national governments to successfully manage in today’s more rapid and complex environment.

The increasing overlap, interrelation and convergence between the public and private sectors will spur new demands from citizens and consumers. New models are arising to fill these needs, with implications for industry and corporate information brokers, and for their internal systems of communication and governance. As with global markets, requirements for openness and accountability will no longer be optional. Openness is an ‘underlying technical and philosophical tenet of the expansion of electronic commerce’ (OECD 1999), which governments or businesses ignore at their peril.

Recognition of the links between electronic democracy and electronic commerce offers a rich terrain and a useful perspective for consumer advocates, government policy developers and industry planners. Explaining the double value in this two-sided coin can help to blur some of the false dichotomies that permeate thinking about the information age.


Business Entry Point (BEP): http://www.bep.gov.au

Calabrese, Andrew, & Borchert, Mark. (1996). ‘Prospects for Electronic Democracy in the United States: Rethinking Communication and Social Policy’. Media, Culture and Society, 18(2), 249-268.

Chan, Elsie S.K.and Swatman, Paula MC. (2000). ‘Electronic Commerce Careers: a Preliminary Survey of the Online Marketplace’. Presented at the 13th International Bled electronic Commerce Conference, Bled, Slovenia, June 2000.

Clift, Steven. (March/April 1998). ‘Democracy is Online’. OnTheInternet (Journal of the Internet Society), [cited 10/1/99] http://www.e-democracy.org/do/article.html

Department of Communication, Information Technology and the Arts. (1999). From Telehealth to E-Health: The Unstoppable Rise of E-Health. Prepared by John Mitchell of John Mitchell & Associates. [cited 18/7/2000] http://www.noie.gov.au/projects/ecommerce/ehealth/rise_of_ehealth/unstoppable


Feenberg, Andrew. (1995). ‘The Online Patient Meeting’. Paper delivered at the sixth International Symposium on ALS/MND: Quality of Life Issues in Dublin, Ireland. [cited 12/6/2000] http://www.cnsonline.org/www/docs/dublin.html

Frederickson, George. (1999). Gaus Lecture to the American Political Science Association.

Friedman, Thomas. (2000). The Lexus and the Olive Tree. Anchor Books: New York.

Galloway, James and Adam, Stewart. (2000). ‘Online Property Markets in Australia: Industry Value Transformation’. Proceedings of AUSWEB2000. http://auswe.scu.au/aw2k/papers/galloway/paper.html

Geiselhart, Karin (1999). Does Democracy Scale? A Fractal Model for the Role of Interactive Technologies in Democratic Policy Processes. PhD Thesis, University of Canberra. Also available electronically from the RMIT University School of Business Information Technology web site: http://www.bf.rmit.edu.au/e-commerce

Government Information Centre. [cited 29/7/2000] http://www.ogo.gov.au/projects/services&innovation/gic.htm

Gualtieri, Robert. (1998). Impact of the Emerging Information Society on the Policy Development Process and Democratic Quality. OECD Public Management Service: [cited 4/3/1999] URL: http://www.oecd.org/puma/gvrnance/it/itreform.htm.

Institute of Chartered Accountants in Australia. (1999). Triple Bottom Line Issues Group. [cited 31/7/2000] http://icaa.org.au/ICAA/triple/CentreSet.htm

Kling, Rob (editor). The Information Society: Special Issue on Universal Service. Volume 16, Number 2, 2000 http://www.slis.indiana.edu/TIS/tables_of_contents/toc.html

Nieuwenhuizen, John. (1997). Asleep at the Wheel - Australia on the Superhighway. ABC Books: Sydney.

OECD. (1999). The Economic and Social Impacts of Electronic Commerce: Preliminary Findings and Research Agenda. PDF book: [cited 31/7/2000] http://www.oecd.org/subject/e_commerce/summary.htm

Osborn, Nick. Posting to the Democracies Online Newswire July 6 2000. Chair, Internet Broadcast Task Force, Texas Department of Information Resources

Putting Australia on the New Silk Road: The Role of Trade Policy in Advancing Electronic Commerce. (1997). Department of Foreign Affairs and Trade: Canberra. New Silk Road reports are available from the Department of Foreign Affairs and Trade: http://www.dfat.gov.au

Women’s Discussion Groups on the Queensland Government Office of Women’s Policy site: http://www.qldwoman.qld.gov.au/links/discussion.html

Singapore e-citizen centre: http://www.ecitizen.gov.sg/

Return to Karin Geiselhart's papers