The term “virtual state” is a metaphor meant to draw attention to the structures and processes of the state that are becoming more and more deeply designed with digital information and communication systems. Digitalization of information and communication allows the institutions of the state to rethink the location of data, decision mak- ing, services and processes to include not only government organiza- tions but also nonprofits and private firms. I have called states that make extensive use of information technologies virtual states to high- light what may be fundamental changes in the nature and structure of the state in the information age.

This chapter discusses the technology enactment framework, an analytical framework to guide exploration and examination of information-based change in governments. The original technology enactment framework is extended in this chapter to delineate the distinctive roles played by key actors in technology enactment. I then examine institutional change in government by drawing from current initiatives in the U.S. federal government to build cross-agency relationships and systems. The U.S. government is one of the first central states to undertake not only back office integration within the government but also integration of systems and processes across agencies. For this reason its experience during the past ten years may be of interest to e-government researchers and decision makers in other countries, particularly those in countries whose governments are likely to pursue similar experiments in networked governance. The summary of cross-agency projects presented here introduces an extensive empirical study, currently in progress, of these projects and their implications for governance.

A structural and institutional approach that begins with processes of organizational and cultural change, as decisionmakers experience them, offers a fruitful avenue to understanding and influencing the beneficial use of technology for governance. Focusing on technological capacity and information systems alone neglects the interdependencies between organizations and technological systems. Information and communication technologies are embedded and work within and across organizations. For this reason, it is imperative to understand organizational structures, processes, cultures and organizational change in order to understand, and possibly influence, the path of technology use in governance. Accounts of bureaucratic resistance, user resistance and the reluctance of civil servants to engage in innovation oversimplify the complexities of institutional change.

One of the most important observers of the rise of the modern state, Max Weber, developed the concept of bureaucracy that guided the growth of enterprise and governance during the past approximately one hundred years. The Weberian democracy is characterized by hierarchy, clear jurisdiction, meritocracy and administrative neutrality, and decisionmaking guided by rules which are documented and elaborated through legal and administrative precedent. His concept of bureaucracy remains the foundation for the bureaucratic state, the form that every major state—democratic or authoritarian—has adopted and used throughout the Twentieth Century. New forms of organization that will be used in the state require a similar working out of the principals of governance that should inhere in structure, design and process. This challenge is fundamental to understanding e- government in depth.

Throughout the past century, well-known principles of public administration have stated that administrative behavior in the state must satisfy the dual requirements of capacity and control. Capacity indicates the ability of an administrative unit to achieve its objectives efficiently. Control refers to the accountability that civil servants and the bureaucracy more generally owe to higher authorities in the legislature, notably to elected representatives of the people. Democratic accountability, at least since the Progressives, has relied upon hierarchical control—control by superiors of subordinates along a chain of command that stretches from the apex of the organization, the politically appointed agency head (and beyond to the members of Congress) down to operational level employees.

The significance and depth of effects of the Internet in governance stem from the fact that information and communication technologies have the potential to affect production (or capacity) as well as coordination, communication, and control. Their effects interact fundamentally with the circulatory, nervous, and skeletal system of institutions. Information technologies affect not simply production processes in and across organizations and supply chains. They also deeply affect coordination, communication and control—in short, the fundamental nature of organizations. I have argued that the information revolution is a revolution in terms of the significance of its effects rather than its speed. This is because the effects of IT on governance are playing out slowly, perhaps on the order of a generation (or approximately 25 years). Rather than changes occurring at “Internet speed,” to use a popular phrase of the 1990s, governments change much more slowly. This is not only due to lack of market mechanisms that would weed out less competitive forms. It is significantly attributable to the complexities of government bureaucracies and their tasks as well as to the importance of related gov- ernance questions—such as accountability, jurisdiction, distributions of power, and equity—that must be debated, contested and resolved.

In states that have developed a professional, reasonably able civil service, public servants (working with appointed and elected government officials and experts from private firms and the academy) craft the details and carry out most of the work of organizational and institutional transformation. What is the transformation process by which new information and communication technologies become embedded in complex institutions? Who carries out these processes? What roles do they play? Answers to such questions are of critical importance if we are to understand, and to influence, technology-based transformations in governance. Government decisionmakers acting in various decisionmaking processes produce decisions and actions that result in the building of the virtual state.

Career civil servants redesign structures, processes, practices, norms, communication patterns and the other elements of knowledge management in government. Career civil servants are not impediments to change, as some critics have argued. They are key players in government reform. An extended example may be drawn from the experiences of civil servants in the U.S. federal government beginning in approximately 1993. Working with political appointees and outside experts, career civil servants worked out the details critical to the success of several innovations that otherwise would not have been translated from their private sector beginnings to the organizations of the state. Over time, as their mentality and culture has begun to change, a cadre of superior civil servants have become the chief innovators in the government combining deep knowledge of policy and administrative processes with deep understanding of public service and the constraints it imposes on potential design choices. Their involvement is critical not simply as the “users” of technology but as the architects of implementation, operationally feasible processes and politically sustainable designs.