Applications of Electronic Commerce in Public Agencies:

Administrative and Democratic Implications


Others have observed that the discipline and practice of public administration can serve as a source of cohesion in otherwise fragmented, geographically defined political structures. While this political fragmentation may meet certain political needs, it hampers government’s ability to address problems which transcend traditional jurisdictional boundaries. It also creates a plethora of administrative units which must attempt to coordinate with one another in attempting to interface coherently with the public, including citizens, businesses, and corporations. In a relatively stable environment the patterns of coordination maintained by public administrators working in related agencies may be adequate to create the "look and feel" of a coherent polity. However, as the environment becomes dynamic or turbulent, the ability of agencies to facilitate coordination while attempting to adapt is likely to collapse under the pace of change. Under such circumstances agencies are likely to fail in their efforts to respond to both routine and crisis situations, and their governments are likely to lose some of their legitimacy in the eyes of constituents. The advent of electronic data interchange and newer forms of electronic commerce is increasing the complexity of the business environment, and causing transactions to be initiated and completed at increasing speeds. This article explores implications of e-commerce for government agencies, and makes a case that agencies need the "requisite agility" to remain viable and to underpin the legitimacy of governments. It anticipates the role of democratic values as attractors and design entities in shaping global political and administrative systems as global commerce becomes increasingly accelerated and potentially chaotic.




The Challenge of Public Administration

Organizational structures and procedures are being strained by the consequences of technology. Increased outsourcing and revised workflows are shattering corporations into shifting patterns of strategic alliances. Corporations unable or unwilling to adopt new methods are often at risk of losing market share to smaller, more agile competitors. Although not as fluid as corporations, government agencies also experience the challenges and opportunities created by new technologies.

The profound challenge for governments and citizens in the information age goes far beyond the necessity to use new technologies to improve instrumental processes. It requires a fundamental and critical examination of how the transforming power of integrative technologies can reinvigorate democratic processes. Enlightened officials at all levels of government have already recognized this deeper necessity, and some are taking tentative steps in this direction.

In his John Gaus Lecture to members of the American Political Science Association in the Fall of 1999, Dr. George Frederickson noted that while politics continue to be shaped by precise geographic boundaries and characterized by competing interests, public administration is increasingly defined by efforts to create coherent patterns of governance across political chasms:

"The theories and concepts of the clash of interests, of electoral and interest group

competition, of games and of winners and losers have dominated and continue to

dominate much of American Political Science. Public Administration, on the other

hand, is steadily moving away from these theories and concepts toward theories of

cooperation, the commons, networking, governance, and institution building and

maintenance. Public Administration, both in practice and in theory is repositioning itself

to deal with the daunting problems of the disarticulation of the State. In short, Public Administration is the Political Science of making the fragmented and disarticulated

political state work."

As described by Frederickson, the disarticulation of the State involves the declining salience of political jurisdictions, the fuzziness of borders, the growing asymmetry in the relationship between the governed and those who govern, the dissipation of sovereignty, and an erosion of the capacity of jurisdictions to contain or manage complex social, economic, and political issues.

The Harvard Policy Group on Network-Enabled Services and Government (HPG) in their recently completed first guideline paper to public administrators and political leaders made similar observations. They note that the social and political implications of the information age are not yet fully realized and that "we are being forced to make choices that will ultimately refine the essence of government institutions and governance itself." They cite Peter F. Drucker's October 1999 cover story for the Atlantic Monthly in which he asserts that the "truly revolutionary impact of the Information Revolution is just beginning to be felt."

The theme of the Harvard Policy Group's first guideline paper is that political leaders and others have too often assumed a posture of disengagement when it comes to public policy regarding information technology. They write that until recently, elected and appointed persons have too often ignored technology-related issues or have delegated such concerns to others. They conclude that as a consequence of this delegation our core democratic values are at stake, including the constitutional balance between individual liberties and civil order, social justice and cohesion, government's legitimacy and our ability to govern ourselves. They write that in a networked world, the kinds of interactions in which citizens depend upon government increasingly extend beyond geographic political boundaries. They conclude, "Leaders need to address these cross-boundary phenomena by devising new approaches to governance. Government's legitimacy and our ability to govern ourselves are at stake." (emphasis added here)



Defining the Role of Information Technology in Governance

The challenges faced by the Founders of the federal system of government in the United States were minor compared to the challenge of designing architectures of governance today. We live in a world rife with nationalism and a mosaic of overlapping ethnic and religious affiliations. People who do not know their next-door neighbor can maintain frequent and meaningful relationships with others of their choosing "virtually" almost anywhere in the world. Most of the familiar touchstones used to define the design of governments are absent in an environment largely defined in virtual terms.

The global scope of the internet is quickly creating the need for government services on a global level. The existing system of federalism extending from the local governments up to the nation state was evolved prior to the advent of modern communications technology. A three-tiered architecture (local, "state," and national) has proven workable under recent historic conditions. The United Nations is an attempt to distribute a degree of sovereignty and responsibility to an additional tier in the architecture of global government. It is nowhere written that the need for global governance must produce an extension of the architecture of federalism. The prospect of global government is not limited to one vision of the possible future. It is no longer idle speculation to voice concerns about the future of the nation state. If we do not design or evolve a radically new architecture of government and administration we may arrive there through the disinter mediation of government agencies, leading to a failure of governments to retain their legitimacy. When governments become unable to perform routine tasks efficiently and fail to address crisis and potential crisis, the resulting erosion of legitimacy threatens their sovereignty.

We believe that if government agencies can quickly incorporate the methods of e-commerce into their operations, they can help smooth the transition between the old and the new by prolonging the legitimacy of existing governments. The term we use for this capacity to innovate quickly in the face of rapid technological change is "requisite agility." Further, we believe that democratic values will be better served if public administrators embrace the information revolution. Democratic values then become a form of "metadata" that provide context and reference to progressive governance at multiple scales, however defined. Another explanation of this is that democratic values, proliferated by the enlightened practice of public administration, become the "attractors" in the new world "order within disorder" described in chaos theory.

Requisite Agility and the Need for Speed

Entwined with the complexity of these challenges is the speed at which the future is becoming the present. Many people are familiar with "Moore's Law," which is the observation that the amount of data storage that a microchip can hold doubles on the order of every 12 to 18 months. George Gilder has proclaimed a new law emerging -- the Law of the Telecosm holds that total world bandwidth doubles about every four months. Gleick (1999) has described the obsession with speed that precludes reflection. The combination of speed plus turbulence requires a point of stability. Public administration which is driven by democratic values can provide such stability (Kiel 1994). Values provide the resilience that can steer the ship of state through dynamic or turbulent change. But the need for speed makes the application of information technology to this process essential. Figure 1 outlines some of the consequences of a lack of requisite agility within government agencies.

[insert Figure 1 about here]

Ashby in his introduction to cybernetics explicitly associates regulation, information, and survival. He observes that in biological systems the ability to regulate or to adapt to an environment is key to the survival of both individuals and species. The part of a dynamic or turbulent system that inwardly lacks the ability to mirror the complexity of its changing environment is at risk of not surviving. If the part is attempting to regulate the behavior of others in the common environment, then the variety of its moves must be at least as great as the variety of the moves of the other parts of the environmental system. Otherwise it will fail to achieve or maintain whatever steady state its actions are intended to produce. Ashby termed this capacity, "requisite variety." If that part of the common environment lacks requisite variety its survival will be subject to control by some other kind of entity in the environment, or to the complex or chaotic consequences of collective self-organization of the environment as a whole.

The implication of Ashby's law of requisite variety is that if regulatory agencies are too constrained in the range of their discretionary actions, they lose the ability to regulate as the relevant environment (social, economic, political, cultural) becomes increasingly complex. Beyond mere ineffectiveness, they risk loss of survival, and the governments that sponsor them are at risk of loss of survival also. The issue is not solely one of regulation of others. Survival demands an interface (and sufficiently developed "back-end" information processing) complex enough to mirror the relevant environment.

What we term "requisite agility" is implied by Ashby's law of requisite variety. It is not enough for an agency to only have the capacity to process an awareness of its complex environment. Survival (and beyond that regulation) requires an ability to process information, decide and act upon it quickly. If an agency cannot capture, process, decide and act upon information quickly it (and the government that sponsors it) may be at risk of disinter mediation, and beyond that, non-survival. We are accustomed to thinking of the survival of governments in terms of competition with other governments. Death by disinter mediation does not necessarily involve a contest (military or economic) with another government. Governments and their agencies are subject to disinter mediation by other kinds of organizations of all types, including "real" corporations, and emerging forms of virtual associations founded on religious, ethnic, ideological, or other core identities.

To state the point again briefly, if the purpose of an agency is to regulate an industry in which electronic data interchange (EDI) is widely used (for example), and the agency does not have the benefit of the speed made possible by use of that technology, the agency is not likely to be an effective regulator of that industry. In dynamic or turbulent environments, that failure may lead to the disinter mediation of the agency and may threaten the perceived legitimacy and sovereignty of the government itself. While the adoption of methods of e-commerce will force the evolution of public agencies and the governments of which they are parts, such adoptions will help assure that agencies have the requisite agility needed to be effective in dynamic and turbulent environments. The results may include both an administrative streamlining and a democratic dividend in terms of policy formulation and implementation.

Patterns of E-Commerce and of E-Government

In spite of the tendency to recast the role of citizen into the role of the customer, we prefer to use the word, "e-government" rather than "e-commerce," realizing that in either case the patterns are likely to be similar. There is nothing about "e-commerce" that makes it exclusively applicable to business. Some dictionaries include "intellectual exchange" as one of the possible or obsolete meanings of "commerce." The marketplace of ideas is a familiar concept in political science. We intend the word "e-government" to include the use of "e-commerce" models and practices within and between government agencies, plus all additional applications related to democratic process or the unique aspects of government agencies.

[insert Figure 2 about here]

Figure 2 is a classification of various ways communications technology can facilitate e-commerce or e-government. The designations shown are not intended to a comprehensive list. Nor do they indicate the direction of connectivity. All potential connections are assumed to be bi-directional. Synergies can develop among these patterns. For example, an administrative office of the unicameral legislature of the state of Nebraska (US) created an electronic system which largely replaced the use of paper in making proposed legislation available to the elected state senators. Each senator was given a laptop computer to directly access the resources of a preexisting legislative network. The immediate success of this system was to increase the efficiency of the unicameral legislature, (noted in Figure 2 as "L2L," including systems which facilitate work flow within or between legislative bodies).

A synergy was achieved when some of the access to information initially made available to senators was made available to citizens through a portal on the World Wide Web. That opened up the potential for citizen integrated systems -- represented as "C2POL" e-government in Figure 2. Citizens, businesses, and interest groups suddenly had real-time access into the deliberations of the state legislature previously available only to the select few with the resources to send lobbyists to the capital. When you consider how web-based systems can facilitate political communications between citizens, the prospect of citizen integrated systems gives new potential to the ideals of democracy. Ultimately citizens will become more aware of the discretionary powers of the agencies. Citizens will expect agencies to be available on the web, and they will come to expect the kinds of "customer integrated systems" that allow citizens a view into the agency's electronic network, allowing customers to manage their own affairs vis-à-vis the agency.

Administrative Implications of E-Government

In recent years business process reengineering has almost always been the result of the introduction of technology into existing organizations. The act of designing a portal for a government agency is likely to result in the realization that workflows can be streamlined and to expose the need for coordination and integration of processes across government agencies and among governments. Most government agencies are configured as they are almost exclusively for political purposes, and in structure they reflect the geographic fragmentation of the political system. Because agencies of the same government compete with one another for budget, and because agencies of related governments have vested interests in their respective political "turfs," agency officials are often unwilling to accept the standardization necessary to integrate their information systems with the systems of other governments.

In the jargon of e-commerce, a "portal" web site creates one unified view into a collection of information or a collection of processes which would otherwise be difficult or impossible to access or comprehend. The creation of a successful portal is likely to require workflow redesign and the application of principles of information architecture in the design of the web site as the customer (citizen) interface. (Rosenfeld, 1998) It is not uncommon for organizations to rethink their work processes as a result of the design of information systems and other technologies. In the eyes of the citizen, the portal "becomes" the agency. In time, the portal corresponds to the citizen's understanding of what the agency is and how it is configured. If links are to be provided to other agencies, creating a portal means clarifying the relationships among agencies and between jurisdictions and governments. If hyperlinks are provided to the related services of other agencies and other governments, that pattern also becomes part of the citizen's mental map of agencies and governments.

Four Stages of E-Government

In a June 2000 feature article for The Economist, Mathew Symonds presents 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 license or paying fees or taxes. The final stage is an integrated portal that theoretically allows all government services to be handled online, ideally with "24/7" interactivity. Many governments around the world, from the local through to the federal, are already at stage three and planning for stage four. As government agencies progress more or less through Symonds’ stages they are adding variety (in Ashby's sense) to their virtual presence in society. Assuming that the "back end" processing systems necessary in the third and fourth stages are well designed and are implemented on modern equipment of adequate capacity, they are also adding to their requisite agility.

Stage one, the provision of information, can make government more efficient and accessible by providing more information, easily updated. This step alone can increase transparency and may contribute to accountability. The challenge of creating a basic website can cause the managers to reflect upon what their enterprise is to the people who use it. It may also result in some self-reflection regarding agency internal structure and how the mission of the agency relates to the missions of other agencies and of other governments.

At stage two, citizens can provide information about themselves and submit questions and comments to agency officials. This can reduce paper and fax transfer, and eliminate the re-entry errors and staff intensive paper handling that characterize most bureaucracies. Electronic data capture paves the way for integrating the value chain. At this level of sophistication, repetitive questions from citizens can be directed to the correct area, where hopefully an informed staff member will be able to respond in a timely and adequate manner.

Stage three of Symonds’ progression becomes transactional, allowing for payments and a range of legally binding exchanges through citizen integrated systems. At this point, the efficiencies of stage two accelerate, and substantial cost savings are possible. The data stream created can also provide the feedback about how to fine tune, expand or improve online services. These sources of user data are expensive to obtain through traditional research methods. For governments involved in the expensive and often unrewarding area of social marketing, the potential to gather data electronically has great appeal. Here the necessary "back end" involves not just technical systems, but the technical provisions for data security to protect citizens.

The fourth stage in Symonds’ hierarchy of electronic government is 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 difficult and highlight the similarities and differences between government and the private sector. The US site may be a stage four effort; the fact that it has taken so long to reach this point of integration is an indication of the difficulties.

Caldow in her paper, "The Quest for Electronic Government: A Defining Vision," attempts to outline an overall technology strategy for government, beginning with leadership, policy, economic competitiveness, and following through with citizen services, community and digital democracy. Her strategy is couched in the language of "competitive advantage," and appears to assume that portals for citizens can be created one government at a time. She writes that citizens, "don't need to know, or do they care, what department actually processes the transaction." This view of what is needed fits nicely with the notion of a portal as providing the user one unified view, but it glosses the "back end" problem, which is the political fragmentation described by Frederickson and other scholars in public administration. To an extent, the disarticulation of the state may be an unintended outcome of political turf wars and short-sighted cost-cutting initiatives that ignore the need for integration of systems.

Policy and Democratic Implications of E-Government

It is important to acknowledge the policy and democratic implications of each of Symonds’ four stages of system integration. The policy potentials of e-government are generally not yet well developed (Gualtieri 1998, Geiselhart 1999). Each stage of Symonds’ progression has implications for electronically facilitating democratic process. Below we explore these briefly, based on a Robert Dahl’s general but inclusive set of criteria for democratic process (Dahl 1989). The criteria are simple: effective participation, voting equality at the decisive stage, enlightened understanding, and control of the agenda. They are supported by freedom of expression, access to alternative information, and rights of association. These principles may help us flesh out what Caldow’s complete technology strategy for government means in practical terms, building upon and extending the potential of commercial applications of e-commerce.

As previously noted, the mere creation of a static web site (Symond's stage one) can force an organization to examine itself, question its mission, evaluate its workflow processes, and think about how it is perceived by its clients. This alone is likely to push agencies to consider changes unlikely to originate from elected legislatures or halls of justice.

The provision for citizen input has applications for policy development. Posting discussion papers and eliciting comments (Symond's stage two) has become common. Less common is the full transparency of posting all comments. Pushing the policy development stage further into the public arena at earlier stages, where the agenda is still being set, would clearly move government systems in the direction of Dahl’s criteria for democratic process.

As web-based access to the information resources of government offices becomes greater and as the synergies of e-government increase (Symond's stages three and four) the potentials for the infusion of democratic participation into policy processes increases. Policy exchanges become richer at higher levels 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 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 are 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. Democratically, citizens might also require greater access to the government databases and accounts that underpin decision making. In keeping with the network models of electronic commerce, wider communication across levels of bureaucracy, rather then up the hierarchy, might vastly improve government accountability. However, it would, like any other form of disinter mediation, also topple some well entrenched power structures.

Attractors as Design Externalities

Kiel (1994) described public administration patterns as ‘attractors’ similar to those of physical systems operating under chaotic conditions. These behavioral patterns can be stable or unstable, functional or dysfunctional. They are ultimately results of the values and beliefs of the people involved in the system. Likewise, the attractors underlying the information technology infrastructure can only mirror the values and beliefs of society. Behavior of government officials, agency employees, citizens and companies swirls around sets of values -- setting up nonlinear sequences of events facilitated and accelerated by information technology.

[insert Figure 3 about here]

Figure 3 represents an abstract pattern of events influenced by two powerful attractors (sets of values and beliefs) in a chaotic environment. It could be a representation of recent events regarding the distribution of music on the Web. Recent court proceedings involving the Nabster website provide an example of the interaction of two powerful attractors regarding mobility of information and intellectual property. (Nabster is or was a company with a popular website that enabled users to copy and share music using software on the web server. The record companies brought law suits against Nabster for violation of copyrights.) The two powerful attractors in this situation are the Open Source movement's philosophy and manifesto that "information wants to be free," and the values and beliefs of those wanting to continue to protect the property rights of musicians and recording studios. It is evident that many users value the mobility of information (in this case music) more than they value the protection of intellectual property rights. While some musicians see the "writing on the wall" and are adapting to the new market realities, other musicians the established studios seek to perpetuate established business models.

While not advocating a position regarding intellectual property, we see potentially chaotic patterns of behavior resulting from the coexistence of these two attractors. Citizens continue to copy and share digital copies of legally protected work, while court action proceeds. Additional "Nabsters" are likely to arise. While courts and public agencies proceed slowly to challenge these organizations, technology quickly moves toward making it possible for those to share music with others to do so without centralized servers. An alternative path advocated in this paper is based upon the rational and openly agreed upon development agile public agencies having core sets of democratic values facilitated by use of e-commerce. The implementation of this type of electronically-enhanced leadership in global and potentially chaotic systems deserves further exploration.

As complex systems become approach chaos no actor can reasonably hope to control events. Within a chaotic system, leadership means having core values and using the potentials of influence. Attempts to solve problems directly are likely to have unintended and dysfunctional consequences, because no one fully understands what is happening and why. Chaotic systems are nonlinear. Traditional explanations based upon perceptions of cause and effect are incomplete at best. This situation calls for a more reflective style of leadership, at the very time human instincts drive us toward authoritarian leadership. (Neubauer and Jenn, 1998). In such situations an effective leader accepts the futility of attempting to control the situation and is satisfied to influence outcomes based through participation grounded in well-defined values and beliefs.

If government agencies lack the agility to meaningfully participate in a chaotic environment the democratic values of public administrators will not be significant attractors and therefore will not contribute to outcomes. As local and global systems approach chaos the consequence of disinter mediation is not the loss of control. It is the loss of influence. While it is unrealistic to hope to control a chaotic environment, we should expect government agencies to be "in the action" in order that the democratic values of public administrators become attractors and thereby influence (not control) the behavior of others. The inability to be in the action is what we have otherwise termed disinter mediation. The existence of the World Wide Web creates potentials for collective self-organization which are not yet understood or even clearly perceived.

E-Government and the Potential Democratic Dividend

By surpassing the client-server model of network computing, the World Wide Web creates new possibilities in terms of human cooperation. In organizations, the effect of information technology has been to "flatten" the hierarchy. The result has been less dependence upon authority and more autonomy and cooperation in response to the situation, as described by Mary Parker Follett (1999). In societies, the effect of information technology can be to promote democratic processes. In terms of Dahl’s criteria, the Web as we know it today can certainly facilitate freedom of expression, access to alternative sources of information, facilitate association.

How is the world changed when anyone with a modest amount of equipment and technical savvy can become an internet radio station, a news commentator, and through automated translation can communicate meaningfully with almost any other person (with Web access) on the planet? How can we leverage the wealth of data and the efficiencies of electronic commerce to achieve a democratic dividend, and transform the way we govern ourselves? This is no plea for an Oprah Winfrey model of electronic democracy, where pushing buttons on public issues takes on infotainment value (Calabrese and Borchert 1996, Nieuwenhuizen 1997). Being able to pay a property tax online is one thing. Being able to question local officials regarding the amount of it is another. Being able to converse with others easily about property taxes is another. Becoming involved in the budget deliberations which are ultimately related to the amount of property taxes is yet another. Communication begets holding others accountable, but beyond that begets the responsibility of those who communicate.

"E-thepeople" is one of a number of commercial sites that are springing up to provide feedback to government, and this is certainly a healthy indication of active pluralism among the web-wise. Such activities do not, however, absolve government of its critical role not just as a regulator, but as a "place," virtual or otherwise, for ultimate accountability to the people. In this sense, government cannot eschew its obligations to foster and encourage the forms of information flow and discussion that underpin Dahl’s criteria for democratic process.

The design and management of information technology has for too long been the "missing link" in public administration. We believe that the design of modern information systems to promote and facilitate democratic processes requires thought, deliberation, and experimentation. The creation of any complex system involves needs analysis, modeling, and technical design. Implementation is likely to be an iterative, incremental process. While many governments fear the information revolution and attempt to prevent the use of technology for democratic ends, few governments intentionally create systems design to facilitate citizen participation in their own government. The pursuit of a democratic dividend is now overdue. Information technology can be intentionally actively shaped for democratic outcomes. Given the speed of transformation, and the potential for global systems to go chaotic, this matter is urgent than the usual calm academic analysis implies.


Technology itself is neither good nor bad. One vision for government information technology strategy is for governments to gain "competitive advantage" by becoming aggregators of services and by promoting the creation of many small e-commerce start-ups within political jurisdictions. This "let a million web sites bloom," vision of the future is certainly attractive to the companies that supply the services and technologies for the virtual infrastructure. But others see a different future. They see a world of power and wealth concentrated in the hands of an elite able to leverage their technology and their capital. Thus, concurrent with optimistic portrayals of an open-ended future where the virtual and the real pleasantly coexist (Gates 1995, Negroponte 1996) are debates about the growing "digital divide" and the creation of an underclass of "information poor" (Haywood 1995), or the prospect of ‘gated gardens’ on the Internet (Chester 2000).

The information revolution may impact the political systems of the world in such ways that some of the political constraints upon the practice of public administration may be shattered. Agency officials may be more willing to share information with other agencies and agree upon standards if they realize the scope of the challenge at hand. As citizen's expectations are shaped by their virtual experiences with companies, their patience with the often slow and costly processes of government agencies will snap. The opportunities inherent in agencies adopting e-commerce is their helping assure the viability of existing governments, and the prospect of a democratic dividend as citizens gain the capacity to be more directly involved in policy and its implementation.



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