Walter Castelnovo

A stakeholder based approach to Public Value

Castelnovo, W., Ferrari, E. (eds), Proceedings of the 11th European Conference on eGovernment
ECEG 2013
Academic Conferences and Publishing International, Reading, 2013. pp. 94-101









A stakeholder based approach to Public Value
Walter Castelnovo
Department of Theoretical and Applied Science, University of Insubria, Varese, Italy
walter.castelnovo@uninsubria.it

Abstract:
Despite the widely shared expectation concerning the positive impacts that e-government can have
on government and society as a whole, the evaluation of the e-government initiatives so far
implemented worldwide has provided very little evidence for it. This led some scholars to question
whether e-government can determine positive effects on government and society at all.
E-government initiatives implemented during the past two decades have been largely influenced by
the principles of New Public Management and aimed at two main goals: government efficiency and
citizens satisfaction. However, whereas the private sector value system is mainly based on efficiency,
profitably and customer satisfaction, the public sector is characterized by a more complex value
system that also includes transparency and accountability, equal treatment of all service recipients,
democratic participation, citizens well-being, empowerment of individuals and communities. The
traditional efficiency based approaches to e-government, typical of the New Public Management
paradigm, cannot account for all these values and this helps explaining, at least partly, why e-
government appears to have so far had only a limited impact on society. This leads to consider a
different approach to e-government based on the concept of public value that appears to better
account for the public sector value system.
In the paper I discuss a public value based approach to the evaluation of e-government initiatives
based on their capacity of generating value for citizens as they play (even simultaneously) different,
and possibly conflicting, stakeholder roles. After a brief discussion of the so-called e-government
paradox in section 1, in section 2 I consider the reasons that support a public value approach to e-
government. In section 3 a taxonomy of stakeholders is considered that can be used to evaluate the
impacts of an e-government initiative. Finally, in section 4 I show how the public value based
approach can be used to evaluate an e-government initiative.

Keywords: e-government, e-government paradox, public value, evaluation, stakeholders

1. Introduction
Despite considerable investments in e-government initiatives made worldwide during the past years,
whether e-government succeeded in achieving the expected benefits in terms of increased efficiency,
effectiveness and quality in the delivery of government services and better governance is still under
discussion. This led some scholars to explicitly point to a sort of e-government paradox (Bertot &
Jaeger 2008; Foley & Alfonso 2009; Castelnovo 2010, 2013; Savoldelli, Codagnone and Misuraca
2012) that under many respects can be considered as similar to the productivity paradox
(Brynjolfsson 1993; Brynjolfsson & Hitt 1998; Bresnahan, Brynjolfsson and Hitt 2002) and the
performance paradox (Abhijit 2003).
In its more simplified form the productivity paradox amounts to the observation that there is no
relationship between ICT investments and productivity. Similarly, in its more simplified form the e-
government paradox amounts to the observation that there is no relationship between investments in
e-government initiatives and the improvement of Public Administration. This also includes the citizens
satisfaction toward the services delivered by Public Administration that does not seem to rise in line
with objective service improvements (what is known as the delivery paradox discussed at length by
Blaug, Horner and Lekhi (2006) and by Horner and Hutton (2011)).
During the years an extensive literature has been devoted to the productivity paradox, and some
explanations of it have been suggested (Brynjolfsson 1993; Gunnarsson, Mellander and Savvidou
2004; Foley & Alfonso 2009). There are three main arguments that have been used to explain the
productivity paradox:

1) Lags due to learning and adjustment: it takes time before the productivity-enhancing effects of a
new technology can be realized.
2) Mismanagement of information and technology: little or no account has been taken of the
complementarity between ICT and changes in work practices and skill upgrading.
3) Mismeasurement of inputs and outputs: it is not always clear what should be measured in
evaluating the possible benefits determined by ICT investments.

In this paper I will consider the third argument above and I will discuss whether it can be used to
explain the e-government paradox as well. More specifically, I will argue that the evaluation of e-
government initiatives based on the traditional evaluation techniques usually applied in the private
sector does not account properly for the complexities of the public sector. Indeed, traditional efficiency
based approaches to e-government, typical of the New Public Management (NPM) paradigm, did not
succeed in accounting for the overall impacts of e-government on society (Kelly, Mulgan and Muers
2002; Bonina & Cordella 2009). As observed by Hellang and Flak (2012, p. 247):

The public sector is characterized by a more complex value structure than the private
sector. Where private sector organizations are primarily occupied with ensuring and
increasing profitability, public sector organizations need to balance their focus between
e.g. transparency and accountability, equal treatment of all service recipients, promoting
democratic participation all in a cost efficient and legal manner.

This leads to consider a different approach to the evaluation of the benefits possibly deriving from e-
government initiatives based on the concept of public value that, as argued by Kelly, Mulgan and
Muers (2002, p. 3), provides a broader measure than is conventionally used within the NPM
literature, covering outcomes, the means used to deliver them as well as trust and legitimacy.
In this paper I will discuss a public value approach to the evaluation of e-government initiatives (a
project, a programme, a policy) based on their capacity of generating value for citizens as they play
different stakeholder roles. The paper is organized as follows. In the next section I will discuss the
concept of public value and the relationship between public value and e-government. In section 3 a
taxonomy of stakeholders will be considered that can be used to evaluate an egovernment initiative
based on its capacity to create public value. Finally, in section 4 I will show how the public value
based approach can be applied in the evaluation of a specific e-government initiative.

2. Public value and e-government
The concept of public value, originally developed in the public administration literature (Moore 1995;
Benington & Moore 2011; Williams & Shearer 2011), is continuously gaining popularity also within the
e-government community, even outside the limits of the academic debate (Castelnovo & Simonetta
2008; Codagnone & Undheim 2008; Misuraca, Alfano and Viscusi 2011; Karunasena & Deng 2012;
Yu 2008). The concept of pubic value is central for government agencies: as the goal of private
managers is to create private (economic) value, the goal of government agencies is to create public
(social) value (Moore & Khagram 2004). Despite its apparent simplicity, the concept of public value is
difficult to define, and there is not an exact and universally accepted definition of what public value
means. As a consequence, it is also not clear how exactly e-government could impact public value.
However, since e-government aims at improving/transforming government through the use of ICT, it is
reasonable to expect that e-government should improve the government capacity of producing public
value through public sector innovation.
By reformulating Moore's original definition of public value as what the public most values (Moore
1995), Benington (2011) defines it in terms of what adds value to the public sphere. According to
Grimsley, Meehan and Gupta (2006), public value is the value that citizens and their representatives
seek in relation to strategic outcomes and experiences of public services. Harrison, Pardo, Cresswell
and Cook (2011) argue that public value focuses attention on the collective and societal interests that
are served by particular institutional arrangements and actions of government.
Public value is a multidimensional concept that includes the sense of economic value, but does not
reduce to it; public value includes also a variety of dimensions of value that cannot be measured in
strictly monetary terms. Harrison, Pardo, Cresswell and Cook (2011, p. 3) define the set of basic
value types reported in Table 1 and the value generating mechanisms reported in Table 2:

Table 1: Value types

Value type Description
Financial impacts on current or future income, asset values, liabilities, entitlements, or
other aspects of wealth or risks to any of the above
Political impacts on a persons or groups influence on government actions or policy, on
their role in political affairs, influence in political parties or prospects for public
office
Social impacts on family or community relationships, social mobility, status, and
identity
Strategic impacts on persons or groups economic or political advantage or
opportunities, goals, and resources for innovation or planning
Ideological impacts on beliefs, moral or ethical commitments, alignment of government
actions or policies or social outcomes with beliefs, or moral or ethical positions
Quality of
life
impacts on individual and household health, security, satisfaction, and general
well-being
Stewardship impacts on the publics view of government officials as faithful stewards or
guardians of the value of the government in terms of public trust, integrity, and
legitimacy


Table 2: Value generating mechanisms

Value generating
mechanisms
Description
Efficiency obtaining increased outputs or goal attainment with the same resources,
or obtaining the same outputs or goals with lower resource consumption
Effectiveness increasing the quality of the desired outcome
Intrinsic
enhancements
changing the environment or circumstances of a stakeholder in ways
that are valued for their own sake
Transparency access to information about the actions of government officials or
operation of government programs that enhances accountability or
influence on government.
Participation frequency and intensity of direct involvement in decision making about or
operation of government programs or in selection of or actions of
officials.
Collaboration frequency or duration of activities in which more than one set of
stakeholders share responsibility or authority for decisions about
operation, policies, or actions of government

According to Harrison, Pardo, Cresswell and Cook, government actions impact on the value
generating mechanisms that, in turn, create public value. The use of ICT by government organizations
can magnify the value generating mechanisms capability of creating value. Thus, by rephrasing the
example considered by Harrison, Pardo, Cresswell and Cook (2011, p. 4), the online release (and
renewal) of licenses (a typical e-government service) may increase efficiency or effectiveness and
yield strategic or financial public value for citizens that use such licenses. From this point of view, the
impact of e-government initiatives on public value creation can be represented as in Figure 1:



Figure 1: The magnifying effect of e-government on value creation
3. Public value and e-government stakeholders
Citizen orientation has been a leading principle of e-government since the early 2000s. Under the
NPM approach that dominated the last decade, citizen orientation has mainly been thought of as a
particular form of customer orientation (OFlynn 2007; Bonina & Cordella 2009). This approach led to
focus the evaluation of an e-government initiative almost exclusively on user/customer satisfaction
with the risk of weakening other fundamental citizenship values such as fairness, equity,
transparency, accountability, social justice and democratic participation. As remarked by Brewer
(2007, p. 553), the conceptualization of citizen as customer:

highlights the narrowly defined relationship that public service consumers have with
government, based as it is on their personal satisfaction with the services they receive.
They are driven by individual self-interest and give little attention to other considerations
such as the community interest.

However, it should be observed that government actions usually impact directly neither on particular
citizens nor on citizens in a broad sense; rather, government actions are usually intended to impact
directly on stakeholder groups and on their interests. Indeed, as customers are key stakeholders for
firms, citizens as users/customers of public services are among the key stakeholders for government
organizations. Yet, the customer role is just one of the stakeholder roles that should be taken into
account when considering the impacts of government actions. Harrison, Pardo, Cresswell, and Cook
(2011, p. 2) argue that each government action needs to be treated as potentially presenting value to
multiple and diverse stakeholders from both inside and outside the organization. It follows that to be
most useful, the analysis of public value must center on particular stakeholder groups and their
interests, not the citizen in a broad sense.
Government activities involve a wide range of stakeholders and the application of stakeholder
analysis to government can lead to the identification of a quite long list of possible stakeholders. Of
course, this is also true for e-government initiatives that are characterized by many stakeholders (see,
for instance, (Rowley 2011) for a quite comprehensive list of the stakeholders considered in the e-
government literature) with multiple value dimensions (Chircu 2008). Although stakeholders should be
conceived of as roles rather than directly as individuals and groups, it is important to stress that those
roles are invariably played by individuals, i.e. by citizens. From this point of view, the way in which
government initiatives impact on citizens playing a stakeholder role could be represented as in Figure
2:



Figure 2: Government initiatives and citizens as stakeholders

Conceiving stakeholders as roles played by citizens determines two relevant consequences. On the
one hand it explains why the list of the stakeholders involved in government activities can be so long.
Actually, even when they are targeted toward a specific segment of the population, government
initiatives impact, at least indirectly, on all the citizens (if only because government activities use
public resources); this makes the emergence of conflicts of interests among different stakeholders
very likely. On the other hand, it highlights the possibility for an individual to play several different
stakeholder roles, either concurrently or in sequence. Thus, for instance, an individual can
simultaneously be a taxpayer that funds public administration, a consumer that uses the services
delivered by public administration and a civil servant working in a government agency. This can
determine the emergence of conflicts of interests that must be considered in evaluating a government
initiative from the point of view of the public value it delivers to citizens. Actually, as a user of the
services a citizen would like to receive better services from the public administration. However, this
could determine a higher cost for service delivery (at least on the short term), which could mean that
the citizen has either to pay a higher cost for accessing the services or to be prone to incur in a higher
level of taxation. Similarly, as a civil servant a citizen might want a higher wage, which is a private
value for him; however, this could mean that public administration has to spend more for salaries and
this, as a consequence, could force public administration either to invest less in improving the quality
of the services (which means less value for the citizen as user) or to higher the level of taxation
(which means less value for the citizen as taxpayer).
For this reason, to understand how an e-government initiative could impact public value a careful
identification of the stakeholders involved, of their interests and of their mutual relationships is
needed. This includes also the identification of how the different stakeholders could be impacted by
an e-government initiative and what are the aspects of public value that could be more relevant for
them (Castelnovo & Simonetta 2008; Castelnovo 2013; Rowley 2011; Cresswell & Sayogo 2012).

4. Evaluating the public value delivered by e-government initiatives
The stakeholder perspective is the corner stone of public value assessment (Cresswell & Sayogo
2012); however, there are two aspects that must be carefully considered when applying it to the
evaluation of e-government initiatives. On the one hand, citizens usually play different stakeholder
roles and the same individual can simultaneously play conflicting roles with respect to an e-
government initiative. It follows that an e-government initiative could determine a positive impact on
citizens as they play a specific role while some less positive (or even negative) consequences could
derive for them as playing different stakeholder roles. On the other hand, what represents a value for
a stakeholder group not necessarily can be considered as a public value; stakeholder roles are played
by individuals and the value delivered to specific stakeholders could be a private value for the
individuals playing those roles.
Public value is strictly related to collective and societal interests instead; the value possibly created by
government initiatives cannot be assessed solely at the level of customer or a single organization
but needs to include the value for the wider population and also (...) for future generations of citizens.
(Hartley 2011, p. 181) Even in case a government initiative is explicitly targeted toward a specific
stakeholder group, it should be designed to deliver, either as a direct or as an indirect consequence of
its implementation, a value also to other stakeholders (or, at least, to avoid possible negative impacts
on other stakeholder groups). This makes that initiative consistent with the achievement of collective
and societal interests, which is the necessary condition for it to create a public value.
This requirement characterizes the public value approach and can be related to two fundamental
principles of Edward Freemans managing for stakeholders, namely (Freeman, Velamuri and
Moriarty 2006, p. 7):

1. stakeholders interests go together over time; managers must keep the stakeholder interests in
balance, hopefully mutually reinforcing each other
2. seek solutions to issues that satisfy multiple stakeholders simultaneously; managers need to find
ways to develop programs, policies, strategies, even products and services that satisfy multiple
stakeholders simultaneously

Based on the observations above, a public value and stakeholder-based evaluation of an e-
government initiative needs to assume a whole-of-system approach - that is, an approach that
simultaneously considers all the stakeholders that can be impacted by it, either directly or indirectly. A
whole-of-system approach makes it possible to better evaluate the distribution of the benefits that
possibly derive from an e-government initiative, thus avoiding the risk of evaluating as positive an
initiative that while delivering value to specific stakeholders, determines less positive (or even
negative) results for other stakeholders. For this approach to evaluation the crucial point is the
identification of a comprehensive list of stakeholders and of the possible benefits e-government could
deliver to each of them. The evaluation of a specific e-government initiative can then be based on the
analysis of how the benefits deriving from it are distributed among different stakeholder groups and on
whether that initiative determined positive impacts also for stakeholder group(s) not directly targeted
by it.
This approach to evaluation can be exemplified by considering the evaluation of an initiative for
reducing the administrative burdens on enterprises through the simplification of the administrative
procedures and the implementation of one stop shop for enterprises (which is a typical e-government
service). Such an initiative is directly targeted toward citizens as entrepreneurs; indeed, if successful,
it creates an obvious value for the citizens playing that role (this can also include the reduction of the
direct and indirect costs enterprises incur for their relationships with Public Administration). However,
this value is a private value for those citizens. In order to verify whether that initiative succeeds in
creating a public value, it should be considered whether it can determine positive benefits for citizens
also as they play stakeholder roles different from that of entrepreneur.
Table 3 reports some stakeholder roles (and some possible benefits that can be associated with
them) that could be impacted by an initiative like the one in the example, even without being directly
targeted by it.

Table 3: Benefits that can be associated with some stakeholder roles

Stakeholder roles Examples of benefits deriving from e-government
initiatives
Citizen as policy maker
(person playing the role of policy
maker within public
administration)
increase of the transparency, openness, accountability
and trustworthiness of government as a whole;
cooperation and integration among different agencies
and different levels of government
Citizen as civil servant
(person working for public
administration)
increase of the human capital in government
organizations; empowerment of the employees that
could determine better working conditions for them and
better services for citizens and enterprises
Citizen as participant
(person participating in democratic
processes)
increase of the transparency and openness of
government as a whole; empowerment of citizens that
could contribute to a better democracy
Citizen as tax payer
(person who, through taxation,
funds public administration)
increase of the global efficiency and effectiveness of
government, which could mean costs reduction and,
consequently, a possible lowering of the level of
taxation
Citizen as such
(any person having the right of
citizenship)
increase of the quality of life and the well-being of both
the citizens and the communities they live in

Depending on how it has been designed and implemented, an e-government initiative for the
reduction of the administrative burdens on enterprises and the implementation of one stop shop for
enterprises could determine further benefits in terms of:

Increased transparency in the procedures for starting, transforming or closing a business; this can
create a value both for citizens as policy makers, in terms of government stewardship, and for
citizens as participants, in terms of the possibility of exerting more controls on government actions
and decisions.
Increased inter-agency cooperation (as required by the one stop shop model); this can create a
value for citizens as policy makers, in terms of the integration among different agencies and
different levels of government, and for citizens as civil servants, in terms of empowerment of the
employees through the development of interpersonal skills.
Increased efficiency in the delivery of services to enterprises; this can create a value for citizens as
tax payers, in terms of a better spending of public resources.
Increased ease of doing business and competitiveness; this can create a value for citizens as
such, in terms of the countrys better economic conditions that in the long term can contribute to
increase the citizens well-being and quality of life.

An e-government initiative that, despite being specifically targeted to citizens as entrepreneurs, would
nevertheless determine benefits like those listed above creates a public value. Actually, it not only
simultaneously addresses the interests of different stakeholder groups, but it also determines
outcomes (in terms of efficiency, transparency and quality of government and contribution to a
wealthy society) that obviously respond to collective and societal interests.

5. Conclusions
The productivity paradox (and the e-government paradox as well) roughly amounts to the observation
that there is little or no relationship between ICT investments and productivity. According to one of the
explanations discussed in the literature, the productivity paradox arises because of a
mismeasurement of inputs and outputs due to the fact that it is not always clear what should be
measured in evaluating the possible benefits determined by ICT investments.
The traditional efficiency based approaches to e-government, largely influenced by the principles of
New Public Management, tend to measure the effects of e-government initiatives simply in terms of
increased efficiency and users/customer satisfaction, thus failing to account for other relevant aspects
of the public sector value system.
In this paper I argued for an approach to the evaluation of e-government initiatives based on the
concept of public value that provides a better way of thinking about the goals and performance of
public administration. Under such an approach, the evaluation of an e-government initiative is based
on its capacity of generating value for citizens as they play different, and possibly conflicting,
stakeholder roles. By considering different aspects of public value and the way in which they can
impact on different stakeholder groups, a public value based approach allows a better understanding
of the possible impacts of e-government on society, especially those impacts that cannot be
measured directly in terms of efficiency and user satisfaction.
Moreover, being based on a whole-of-system perspective, the public value approach can help to
better understand another possible explanation of the productivity paradox (and the e-government
paradox as well), namely the one referred to as the redistribution argument (Brynjolfsson 1993). This
argument suggests that little or no benefit can be seen from ICT investments at the aggregate level
because those investing in the technology benefit privately but at the expense of others.
The approach to evaluation described in this paper requires that a government initiative is evaluated
with respect to its capacity to deliver value to all the stakeholders involved, not only to those directly
impacted by it. By assuming such an approach, the paradox simply does not arise. On the one hand,
if the evaluation shows that an e-government initiative delivered value only to some stakeholders,
possibly at the expenses of others, this can be ascribed either to a deliberate political choice or to the
inability of the decision makers to foresee unexpected consequences of that initiative. In either case
there is nothing paradoxical. On the other hand, if the evaluation shows that an e-government
initiative did not deliver any value to the stakeholders, this simply means that the initiative failed to
achieve the expected results. Also in this case there is nothing paradoxical.

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