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7 Identifying Core Capabilities
for Transformational Local
Digital Government
A Preliminary Conceptual Model
Luis Felipe Luna-Reyes and
J. Ramon Gil-Garcia
CHAPTER OVERVIEW
Using information technologies to transform government organizations has
been an important component in public sector reform efforts around the
world. However, benefi
fits from such strategies often remain only a promise,
not a reality. In order to better understand the reasons for digital govern-
ment success and failure, many researchers have explored the problem fol-
lowing one of two approaches: (1) identifying a list of success factors or (2)
developing a better understanding of the problem through process models.
In this chapter, following the process tradition, we propose the use of a
resource-based view of the organization to explore core capabilities of local
governments for transformational digital government. Based on the per-
spectives of thirty-four municipal Chief Information Officers (CIOs) from
diff
fferent regions in Mexico, who participated in three workshops in June
2010, we propose a preliminary conceptual model of the core capabilities
and resources necessary for a successful transformational digital govern-
ment strategy.
1 INTRODUCTION
In the last two decades, governments around the world have increased the
use of information technologies (IT) as key components of their adminis-
trative reform eff
fforts. This particular strategy has been commonly named
digital government, and consists of the use of IT in government opera-
tions, services, and democracy. The inclusion of digital government strat-
egies responds to the promise of IT to transform government activities,
creating value for citizens, businesses, and other stakeholders. Some of
these promises include increases in tax collection, effi
ci
ffi encies and savings
in government operations, greater transparency, and improved account-
ability (Gil-Garcia & Helbig, 2006). However, there is little evidence of
Identifying Core Capabilities 75
such transformation (Feller, Finnegan, & Nilsson, 2011; Scholl, 2005).
Generally, benefi
fits from IT investments do not automatically result from
the introduction of new technologies, but from a coordinated series of
eff
fforts aligned with the main strategy of the organization, such as pro-
cess improvements, staff
ff training, and better organizational standards
(Feller et al., 2011). Moreover, and particularly important in the pub-
lic sector, organizational activities are also constrained by institutional
arrangements (Fountain, 2009; Staff
fford & Turan, 2011). In this way,
benefi
fits from digital government are to a large extent still a promise for
many government organizations.
Local governments are not an exception, and they face particular chal-
lenges. Local government IT departments have limited influenc
fl
e on the
municipality development plans and policies, and they often do not have
the appropriate organizational structure, trained staff
ff, or budget to man-
age a digital government strategy. Local CIOs al
so perceive local laws and
regulations as important challenges to digital government. In particular,
the 3-year term of a mayor in Mexico is perceived as a major challenge for
two reasons: any strategy needs to be implemented in a short period of time
and frequently the next mayor does not carry on with the main strategies
and objectives. The general lack of resources available to local governments
and their municipal CIOs is a problem not only in Mexico, but also around
the world (Holden, Norris, & Fletcher, 2003). As a result of these particu-
lar challenges, local governments often fail to achieve the lofty objectives
of digital government.
There are two main perspectives to explain the limited transformational
impacts of digital government initiatives. The fi
first of these two perspec-
tives has focused on the search for key success factors (see, for example,
Gil-Garcia & Pardo, 2005). These studies usually involve statistical testing
of the impact of factors, such as the size of projects or high-level manage-
ment support in the success of digital government initiatives. In contrast, a
second approach consists of the detailed study of the development process
for a particular project (see, for example, Luna-Reyes, Zhang, Gil-Garcia,
& Cresswell, 2005). This approach usually relies on case data and process
models to explain project success. Following this later tradition and enrich-
ing it with key concepts from the resource-based view of the organization,
this chapter proposes that there is a set of intertwined core capabilities
required to successfully implement a truly transformational digital gov-
ernment strategy. The main question guiding our research is which core
capabilities and resources are necessary to develop a transformational local
digital government program?
The chapter is organized in six sections, including the foregoing
introduction. Section 2 presents a review of previous studies focusing on local digital government and the resource-based view of the organization. This view suggests that there are some core capabilities that
allow organizations to performing certain actions in a better way. These
76 Luis
Felipe Luna-Reyes and J. Ramon Gil-Garcia
capabilities are intertwined and, therefore, they cannot be studied in iso-
lation. Section 3 describes the research design and methods used for this study. This chapter is mainly based on three workshops with thirty-four
Mexican local government CIOs. Section 4 highlights core capabilities and resources identifi
fied in the workshops. Section 5 proposes an initial
conceptual model and describes each of its main components. Finally,
Section 6 provides some fi
final comments and suggests areas for future
research in this topic.
2 LOCAL
DIGITAL GOVERNMENTS AND CORE CAPABILITIES
This section introduces two areas of research that are relevant to our work.
The fi
first subsection includes a review of recent studies about digital gov-
ernment at the local level. The second subsection constitutes a review of
the resource-based view of the organization. We think that this view could
potentially contribute to a better understanding of digital government as a
transformational phenomenon.
2.1 Digital Government at the Local Level
The most signifi
ficant disparities in taking advantage of the transforma-
tional potential of digital government take place at the local level. Sev-
eral local governments have seized the opportunities off
ffered by digital
government and have not only become leaders in digital transactions, but
have reached an advanced stage of digital government in which citizen
participation is an essential component (Fagan, 2006). Unfortunately,
other localities are facing constraints in terms of budget, human capa-
bilities, infrastructure, and know-how (Holden et al., 2003). Some of the
most important areas of opportunity for digital government at the local
level are providing information, off
ffering digital government forms and
online transaction processing, improving urban services, strengthening
tax collection capabilities, improving strategic planning processes, and
facilitating the creation and implementation of partnerships with other
authorities (Beynon-Davies & Williams, 2003). Digital government is a
powerful tool for mayors to listen to citizens’ needs, enabling them to
act quickly and effi
fficiently (Reddick & Frank, 2007). Moreover, local
governments with greater presence in the network are able to off
ffer vari-
ous applications such as electronic commerce, transactions, customer
service, geographic information systems, and citizen participation (Kay-
lor, Deshazo, & Eck, 2001). Areas of particular interest for transforma-
tional government are those related to citizen services, where technology
off
ffers opportunities for personalization, access through multiple chan-
nels, or even service co-creation by government and citizens (King &
Cotterill, 2007).
Identifying Core Capabilities 77
Similar to other levels of government, the adoption of digital govern-
ment at the local level is the result of organizational factors (features and
capabilities of the government’s IT department) and contextual factors
(external infl
fluences such as population size and citizen demands) (Gil-
Garcia & Pardo, 2005; Reddick, 2004). Among the main determinants of
the success of digital government strategies are an appropriate infrastruc-
ture (Holden et al., 2003); the existence of digital citizens (Asgarkhani,
2007); the provision of interactive services; and the inclusion of citizens
in order to more precisely understand the problems and opportunities
in the community (King & Cotterill, 2007). Increased citizen participa-
tion allows local governments to obtain more information, thereby giving
them the opportunity to off
ffer a wider range of services that better meet
the population’s needs. A municipality’s size and type of government are
also determining factors in the implementation and development of digi-
tal government (Moon, 2002).
Other factors that impede the advancement of digital government
are limitations in the technological infrastructure, cultural and educa-
tional paradigms, appropriate software acquisition, the large investment
necessary to begin digital government programs, security and privacy,
complications that may unexpectedly arise in the implementation and
monitoring phase, and doubts about the return on investment from
building a website to provide services to the population. A major disad-
vantage, especially in developing countries, is the advancement of public
education, because if the population does not have the necessary knowl-
edge, online access of municipalities will be very small and, consequently,
the benefi
fit to citizens will be limited (Evans-Cowley & Conroy, 2006).
Organizational and institutional innovations have proven to be effective
ways to o
vercome some of these challenges. Four confi gur
fi
ations have
been identifi
fied in the literature: aggregation (joining municipal efforts),
syndication (sharing services), consumption (citizens, universities and
other stakeholders as consultants), and co-creation (Feller et al., 2011).
2.2 Resource-Based View of the Organization
A potentially useful strategic view to transformational digital government
is provided by the Resource-Based View of the fi
firm (RBV). One of the fi
first
contributions to the study of the RBV was conducted by Penrose (Rug-
man & Verbeke, 2002). However, it wasn’t until 1984 that the study of
resources as a key component of a fi
firm’s performance became important
(Wernerfelt, 1995). Barney (1991) noted that competitive advantages are
the result of capacities and resources that companies control, which are
valuable, rare, imperfectly imitable, and not substitutable. Such resources
and capabilities can be seen as bundles of the tangible and intangible;
for example, management skills, organizational routines and processes,
and information and knowledge (Barney, 2001). The dynamic capabilities
78 Luis Felipe Luna-Reyes and J. Ramon Gil-Garcia
approach allows for identifying the fi rm
fi
’s core capabilities and how com-
binations of expertise and resources could be developed, deployed, and
protected (Teece, Pisano, & Shuen, 1997). The importance of dynamic
capabilities lies in their ability to create, integrate, recombine, and release
resources, thus modifying the original resource base. In the long term,
a competitive advantage lies in using dynamic capabilities sooner, more
astutely, or more fortuitously than the competitors to create an advanta-
geous resource confi gur
fi
ation.
RBV has been incorporated into the analysis of the role that information
systems and information technologies play in organizational performance.
RBV provides an analytical framework for assessing the strategic value of
information systems, as well as a guide for diff
fferentiating between various
types of information systems and evaluating their impact on performance
of the organization (Wade & Hulland, 2004). In fact, empirical research
has found a positive relationship between superior IT capability and supe-