International Journal of Public Sector Management

Public private partnership (PPP) outcomes in e-government – a social capital

explanation
Madhuchhanda Das Aundhe, Ramesh Narasimhan,
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IJPSM
29,7
638
Received 3 September 2015
Revised 1 March 2016
18 May 2016
Accepted 22 May 2016
Downloaded by Korea Development Institute At 15:50 09 June 2017 (PT)
International Journal of Public
Sector Management
Vol. 29 No. 7, 2016
pp. 638-658
© Emerald Group Publishing Limited
0951-3558
DOI 10.1108/IJPSM-09-2015-0160
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0951-3558.htm
Public private partnership (PPP)
outcomes in e-government – a
social capital explanation
Madhuchhanda Das Aundhe
Independent Researcher, Bangalore, India, and
Ramesh Narasimhan
SVKM’s NMIMS University, Bangalore, India
Abstract
Purpose – The purpose of this paper is to explain how and why the intangible critical success factors
(CSFs) determine the outcomes of public-private partnerships (PPP) projects in e-governance.
Design/methodology/approach – Drawing from the literature, PPP was conceptualized as an
organization which facilitates the creation of social capital. It is argued that the intangible
CSFs correspond to the key dimensions of the social capital that drives the development of
intellectual capital in the course of addressing the challenges faced during the execution of an
e-governance project. These efforts determine the accomplishment of the desired project objectives.
The emergent framework was applied to an e-governance PPP project to anecdotally exemplify
how the deficiency of organizational characteristics impedes the formation of social capital,
resulting in project failure.
Findings – A theoretical framework was developed to illuminate the mechanisms and the attendant
propositions that explain how and why the intangible factors influence the PPP outcomes.
Research limitations/implications – This study fills a critical gap in the literature on PPP projects
in general, and on e-governance projects in particular. It also extends the application of the social
capital framework from an intra-organizational to an inter-organizational context.
Practical implications – The results of this study foster a better understanding of the drivers of
success in managing a PPP model in e-governance initiatives.
Social implications – This research work would help in improving the formulation and management
of PPPs in the emerging economies, which could potentially enhance the societal outcomes.
Originality/value – The explanatory framework of this research serves as a useful perspective to
address policy and program implementation issues of PPP initiatives in e-governance.
Keywords Social capital, Critical success factors, E-governance, Public-private partnerships
Paper type Conceptual paper
1. Introduction
This paper addresses the question of how and why public-private partnerships (PPP)
projects succeed or fail, especially in the context of complex e-government initiatives.
The challenges faced by a PPP project during its implementation and the issues of
relationship and co-operation between the public and private partners need to be
studied in detail.
The internet boom led to the emergence of e-government initiatives in the late 1990s.
We define e-government as the capacity to transform public administration by using
information and communication technologies (ICTs) to enhance the ease of access of
government information and services to citizens, non-government organizations, and
other government entities. The complexity of e-government projects being very high,
their reported failure rates are also in the range of 60-80 percent (Heeks, 2006; Stanforth,
2010), resulting in significant loss of financial, human, and political resources, as well as
loss of potential benefits of e-government to the stakeholders.
 The PPP arrangement has been offered as a success strategy for e-government PPP outcomes
projects (Gil-García and Pardo, 2005; Chen and Perry, 2003). It is an arrangement in e-government
between a public entity (government) and private entity (non-government) whereby,
services traditionally delivered by the public entity are provided largely by the private
entity under a set of terms and conditions well defined at the outset. PPP projects have
become popular in a number of countries since they help governments in reducing their
spending and borrowing, and enable them to leverage the efficiency of the private 639
enterprise. Thus, PPP combines the accountability of the public sector with the
efficiency of the private entities and help in sharing risks (Hodge and Greve, 2007).
In recent times, several e-government projects are being implemented through PPP
arrangements (Ruuska and Teigland, 2009; Sharma, 2007). However, partnerships, in
general (whether in the public or private sectors), have often not delivered the expected
outcomes, largely due to relationship issues between the partners (Diamond, 2006;
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Friend, 2006; Laffin and Liddle, 2006; Wettenhall, 2007; Lacity et al., 2009). Hence, there
is an urgent need for a closer understanding of relationship issues in e-government
partnership arrangements.
Relationship issues in partnerships, both in e-government projects and others, are
usually due to reasons like lack of shared vision, weak consensual decision-making
capabilities, lack of respect and trust between partners, etc. It is widely reported that
such intangible factors of the “soft” kind (i.e. trust, communication, relationships, and
shared vision) have been observed to have greater influence on partnership outcomes
than the “hard” success factors, that is financial and technological aspects (Moon et al.,
2007; CITU, 2000; Jacobson and Choi, 2008; Patching and Chatham, 2000; Strassmann,
1997; Trafford and Proctor, 2006). The influence of such soft factors on the outcomes of
PPP projects in e-government could be much more due to the complexity of the
adoption of ICT innovations within a government system (Heeks, 2005). While many
researchers have cited the soft factors, a deeper analysis is required to understand how
the soft factors determine outcomes. Therefore, this study specifically addresses the
issues of how and why the soft success factors influence PPP project outcomes.
In order to develop the explanation, we have chosen the social capital framework
(Nahapiet and Ghoshal, 1998), as this provides the knowledge-oriented approach that
the PPP model requires – transferring, exchanging, and combining knowledge with
partners and learning from them, in order to innovatively solve the problems and
address the challenges encountered in implementing complex e-government projects
(Foster and Heeks, 2013). The social capital perspective would not only help in
understanding the relationship between the partners, and thus manage the outcome of
the project, but could also inform e-government policies and help shape the practices of
public sector managers.
The paper is divided into seven sections: Section 2 reviews the literature on
e-government in general, and PPP in particular. Section 3 describes the methodology of
the study, while Section 4 develops the explanatory framework. An illustrative case
study is described in Section 5. Section 6 analyses, exemplifies, and discusses the case
based on literature review and the developed explanatory framework. The conclusions,
implications, limitations, and directions for future research are presented in Section 7.

2. Literature review
There are several definitions of e-government, but the general consensus among
authors is that electronic government entails much more than the evolutionary process
of systems and technologies; it includes organizational, institutional, and
 IJPSM administrative practices too (Gil-Garcia, 2012; Gronlund and Horan, 2004). Therefore,
29,7 electronic government is a much more complex phenomenon, one that extends well
beyond internet technologies (Luna-Reyes et al., 2008). Grönlund and Horan (2004,
p. 714) in their review of definitions further add that “all definitions of e-government go
beyond services to the citizen to include organizational change and the role of
government.” Hence, we build on these views (i.e. socio-technical systems, and an intent
640 of organizational change) and define e-government as a capacity to transform public
administration through the adoption of ICTs to enhance the ease of access of
government information and services to citizens, non-government organizations, and
other government entities. This definition articulates the complexity of e-government
initiatives, with emphasis on “transformation” and “capacity” creation expectations
from e-government projects, and the challenges encountered in the adoption of ICT
as an innovation. Transformation in e-government projects consists of various
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stages – beginning with billboard, partial service delivery, portal with integrated
service delivery, seamless integration of e-services across administrative boundaries,
and finally interactive democracy (Torres et al., 2005). The internal management
capacity, consisting of knowledge and skills, is significantly associated with
performance, productivity, and organizational effectiveness of e-government projects
(Brudney and Brown, 1998; West and Berman, 2001; Chen and Perry, 2003).
The challenges in e-government stem from the complex nature of government as an
organization, and the varied nature of intended outcomes. The nature of a government
organization is portrayed by organizational politics characterized by multiplicity of
stakeholders and goals; groups or coalitions seeking power and control; individual
resistance to change; conflicts and turf wars (Luna-Reyes et al., 2010; Hall, 2002; Joseph,
2010; Chen, 2010; Eynon and Margetts, 2007; Gil-Garcia, 2012). This complexity is
further compounded by institutional factors such as annual budgeting process cycle,
frequent transfer of key civil servants, and periodic electoral changes of the party in
power both at the state and federal levels, which impede the implementation of
large-scale long-term e-government initiatives (Gil-Garcia, 2012; Luna-Reyes et al., 2010;
Eynon and Margetts, 2007; Swar et al., 2012). The intended outcomes of e-government
initiatives are seen as the indicators of success or failure. This adds to the complexity
of the phenomenon, by demanding attention, beyond the efficiency value of the
proposition, toward service quality, openness, accountability, transparency, citizen
participation, policy effectiveness, and development of an enabling legal framework
(Gil-Garcia, 2012). Cordella and Willcocks (2012), too, posit that the medium- and
long-term objective of the public sector is to generate public value, that is to fulfill
notions of economy, efficiency, effectiveness, equity, and the collective aspiration of
the citizens. These objectives are often not stated explicitly and the unclear scope of the
e-government project further contributes to challenges.
Though the need to measure the public value and the overall system performance
has been widely felt (Jaeger and Thompson, 2003; West, 2004; Yildiz, 2012), it is difficult
to evaluate their success or failure due to the political nature of decisions, the
subjectivity of the process, the presence of intangible benefits, the lack of indicators to
measure transformation (Taylor, 2007; Gupta and Jana, 2003; Irani et al., 2005; Yildiz,
2012), and the timing of measurement (Brynjolfsson, 1993). Hence, as a context in which
ICT adoption and diffusion takes place, e-government is extremely complex and
challenging. The complexity and the challenges are far more acute in emerging
economies where “high levels of strategic ambiguity [are] a relatively enduring and
intrinsic aspect of public ICT innovations” (Ravishankar, 2013, p. 316).
 Moreover, in the past it was assumed that adopting technology was the ultimate PPP outcomes
solution for a variety of government problems (Helbig et al., 2009), and that the in e-government
government would automatically start reaping the benefits, when implemented (Ho, 2002;
OECD, 2003). The complexities arising out of the interaction between technology,
organizations, and environments and the need to manage this interaction were ignored
(Gil-García and Pardo, 2005; Helbig et al., 2009). This view of technology as the primary
determinant of success oversimplified the context, and has often resulted in the failure of 641
e-government initiatives (Heeks, 2003). Thus, it is not surprising that the e-government
project failure rates reported are in the range of 60-80 percent, resulting in significant loss
of financial, human, and political resources (Heeks, 2006; Stanforth, 2010). The gravity of
the loss due to failures is much greater in developing countries, which are strapped for
resources and incur higher opportunity costs (Heeks, 2005). Hence, strategies to improve
the chances of success are critical (Amoretti, 2007). Overall, these have stalled the progress
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of e-government toward its promise and potential (Eynon and Margetts, 2007).
There is a growing realization that e-government is a socio-technical system (Heeks,
2003). This demands the development and application of integrative and
comprehensive perspectives of ICT implementation, by drawing from multiple
theories. This would lead to a deep understanding of the relationships between
e-government success and the organizational, institutional, and environmental factors
embedded in the complex government setup (Gil-Garcia, 2012).
Researchers in e-government have reported several requirements and key factors for the
success of e-government initiatives. Based on a study of e-government projects across
50 states of USA, Gil-Garcia (2012) has called attention to factors like collaboration, trust,
communication, partnership, and creative and innovative approaches to overcome the
various organizational, institutional, and environmental challenges. Heeks (2005) has
reported that the soft social factors, more than the hard technical factors, contribute to
success of e-government projects in emerging economies. Several researchers have
strongly argued that the capability to integrate multiple agencies, government services,
and policy domains, which require a shift in the power distribution, trust, and creative
collaboration, within and between the organizations, is a key factor (Layne and Lee, 2001;
Rocheleau, 2003; Chen, 2010). Motivated by the growing trend toward outsourcing in
e-government, the emerging research on sourcing of technologies by the public sector, too,
points toward soft factors like mutual trust, shared knowledge, and common organizational
culture (Duhamel et al., 2014), similar to the private sector (Duhamel et al., 2014; Lacity and
Willcocks, 1998; Levina and Ross, 2003), as critical for successful outcomes. However,
caution is required against blind adoption of private sector practices, due to significant
organizational and institutional differences (Swar et al., 2012).
Chen and Perry (2003) suggested a partnership approach in the public sector, for
contracting out technologies with inherently high complexities, uncertainties, and risks.
The PPP is one such strategic outsourcing arrangement offered as a success strategy for
e-government projects (Gil-García and Pardo, 2005; Chen and Perry, 2003). The partnership
serves as a mechanism to reduce information asymmetry and share risks associated with
changing technology and service needs. Strategic outsourcing through PPPs also helps in
dealing with institutional and environmental factors that are not in the control of public
managers (Gil-Garcia and Pardo, 2005). The additional benefits of the PPP model are
operational efficiency due to private partner capabilities (Hodge and Greve, 2007), innovation
due to combination of resources (Li et al., 2005), and accountability through the pressure of
private sector ethos (Allen et al., 2001). Thus PPP, as a collaborative arrangement, has been
gaining popularity as the model to achieve desired e-government outcomes.
 IJPSM Notwithstanding the several benefits of PPP, its success should not be assumed
29,7 (European Commission, 2004). Studies of successful projects involving partnership, in
general, and PPPs in particular, reveal several critical success factors (CSFs) ( Jacobson
and Choi, 2008). As in aforementioned e-government studies, a perusal of CSFs in PPP
reveals a predominance of “soft” factors, which directly or indirectly relate to
“relationship” (Savas, 2005, Zou et al., 2008; CCPPP, 2001; Jacobson and Choi, 2008). The
642 vital importance of managing relationships in contracting out technologies finds strong
support in the transaction cost economics theory too, which prescribes investment in
“solidifying relations” in order to reduce the costs of opportunistic behavior (Parker
and Hartley, 2003). However, there is very little evidence in the literature, of causal
mechanisms linking “soft CSFs” to project success (Ruuska and Teigland, 2009).
In general, e-government and partnership literature is strong in establishing the
“soft CSFs” and relationship management as drivers of project outcomes; but is weak
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on providing an explanation of the underlying mechanisms.

In order to address this gap, we use the social capital framework (Nahapiet and
Ghoshal, 1998). We believe that the social theory perspective of outsourcing is
relevant to discussing how partnerships can be managed. The other theoretical
perspectives on outsourcing: first, economic – transaction cost theory (Coase, 1937;
Williamson, 1985) and agency theory (Ross, 1973) and second, strategic – resource-
based view (Barney, 1991; Grant, 1991) and resource dependency theory (Pfeffer and
Salancik, 1978), help arrive at the outsourcing decision, but do not lend any insights
on relationship management. In this study, we are also responding to the major
criticism of the extant e-government research, namely weakness in explanatory
power, because of its undue stress on the outcomes at the cost of understanding the
processes (Yildiz, 2007). This insight would help us understand the mechanisms
involved and advance the body of knowledge from a descriptive theory toward a
predictive theory in e-government outcomes (Carlile and Christensen, 2005).
By adopting the social capital framework, this study is consistent with Gil-Garcia’s
remedial call – “multiplicity and diversity of concepts from different disciplines
enrich and increase the explanatory power of the emergent interdisciplinary field of
e-government” (Gil-Garcia, 2012, p. 4).
The purpose of this research study is twofold – first, development of a theoretical
framework to understand “how” and “why” intangible factors influence PPP project
outcome and second, application of this framework to an e-government project to
exemplify and discuss the insights drawn from the framework.

3. Methodology
We, first, constructed a theoretical framework based on the review of the relevant
literature (e-government, IS outsourcing, and PPP) and formulated a set of exploratory
propositions, which wait to be tested and validated. We, then, used a case study of an
e-government project with a view to only illustrate or instantiate our propositions to
improve the comprehension of our theoretical framework and the attendant propositions.
Such a use of case study for instantiation is in line with earlier studies (Foster and Heeks,
2013; Cordella and Willcocks, 2012). We chose the e-government project called Nemmadi
for this purpose because – it was a pioneering project, it was a complex large-scale project
with a strong citizen-interface and consisted of automation of workflows too, it was a
failed PPP, with several challenges during the implementation[1], and we were fortunate
to get permission from the e-government department, government of the State of
Karnataka, in India, to study the project.
 Data regarding Nemmadi project was collected from both secondary and primary PPP outcomes
sources during the period 2009-2012. The secondary sources consisted of news in e-government
reports in dailies, general articles Nemmadi in periodicals, and documents from
government websites. Primary data were collected through semi-structured
interviews of various stakeholders in the Nemmadi project. An interview schedule
was used to guide these interviews. We interviewed government officials at all levels
(i.e. state, taluk[2], and village) and executives at various levels of Comat 643
Technologies (Comat) – the private partner. In all, we interviewed 17 respondents,
including government functionaries and private partner executives. A list of all
respondents is provided in Table I.
Each interview, on an average, lasted for two hours. We visited the Maddur,
Ramanagara, and Kanakapura (taluk headquarters in Karnataka) telecentres and
interviewed the village and taluk-level government officials and citizen users. We also
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interviewed senior officials of Comat, at their head office in Bangalore. All the
interviews were recorded and then transcribed verbatim. This transcribed data were
used for analysis. Examples of challenges were abstracted from situations and/or
extracts from our interviews with the government and private partners of project
Nemmadi. These challenges were interpreted to understand their organizational and
social capital implications. We also went through various processes and technology
related documents of Nemmadi, which helped in the triangulation of the data.

Sl. no. Respondent designation Organizational affiliation

1 Deputy Director General and State National Informatics Centre, Karnataka State Centre,
Informatics Officer Bangalore, under the Ministry of Communication &
Information Technology, New Delhi
2 Project Leader National Informatics Centre, Karnataka State Centre,
Bangalore, under the Ministry of Communication &
Information Technology, New Delhi
3 Vice President – Operations Comat Technologies, Bangalore
4 Manager, Nemmadi Operations Comat Technologies, Bangalore
5 Technical Support Comat Technologies, Bangalore
6 Tahsildar and Executive Magistrate Office of the Tahsildar, Ramanagara Taluk, Department
of Revenue, Government of Karnataka
7 Case Worker Office of the Tahsildar, Ramanagara Taluk, Department
of Revenue, Government of Karnataka
8 District Manager Nemmadi Telecentre, Ramanagara Taluk
9 Applicant for Income Certificate Nemmadi Telecentre, Ramanagara Taluk
10 Computer Operator Nemmadi Telecentre, Ramanagara Taluk
11 Chief Executive Officer Centre for e-Governance, Department of Personnel &
Administrative Reforms (e-government), Government of
Karnataka, Bangalore
12 Assistant Director Directorate of Electronic Delivery of Citizen Services,
Department of Personnel & Administrative Reforms
(e-government), Government of Karnataka, Bangalore
13 Revenue Inspector Kanakapura Taluk
14 Village Accountant Of a village in Kanakapura Taluk
15 Pradhan Village Head in Kanakapura Taluk
16 Computer Operator Nemmadi Telecentre, Kanakapura and Maddur Taluks
17 Management Consultant/Researcher Social Sector, Deloitte Touche Tohmatsu India Pvt. Ltd., Table I.
Bangalore List of respondents
 IJPSM 4. Explanatory framework for PPP outcomes
29,7 4.1 PPP and organizational determinants of social capital
In order to build the theoretical framework, this paper begins by establishing that PPP
is an organization. In this section we argue that the intent of PPPs is to orchestrate the
pooled resources of the private and the public sector partners to take advantage of the
characteristics of an organization, namely intentionality, resources, boundary, and
644 exchange (Katz and Gartner, 1988). This is consistent with the genesis of the concept of
PPP, as discussed in the introductory section – the public sector accesses the human
and financial resources of the private sector and shares the risks in order to deliver a
public good more efficiently and effectively.
Though the partners might never have worked together in the past, the PPP’s
organizational characteristic of intentionality folds them into a shared structure of
beliefs about the purpose and goals like enhancing the efficiency, transparency, and
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accountability in the delivery of services to citizens. Resources, another characteristic

of PPP as an organization, are critical in determining the strategic direction and consist
of human and financial capital and technology. For example, in a PPP, the private
sector gains the strategic opportunity and legitimacy to access the vast arena of public
and mixed goods and services. Also, while the private sector has the skills and
knowledge to adapt to external changes, the public sector is strong on maintaining
consistency and internal integrity (Ojha, 2010). Therefore, a PPP as an special purpose
vehicle (SPV)[3] is a bundle of complementary resources, with the potential to leverage
the combined skills and knowledge, as well as the human and financial resources of
the public and private sectors. As an innovative form of organization, the PPP represents
a new combination of existing resources (Schumpeter, 1934). The SPV structure of a PPP
serves as a clear boundary, demarcating the roles and responsibilities of its members
(i.e. in the combined entity) as distinct from that of the founder-partners (i.e. of the
independent entities). Exchange within and outside its boundary is intrinsic to a PPP
since it is, as stated earlier, a bundle of complementary resources whose potential value
lies in its combination. Hence, it is concluded that although constituted by two separate
entities, a PPP is designed to function as a single independent organization. This creates
organizational conditions for social capital formation.
Nahapiet and Ghoshal (1998) refer to organizational characteristics – time, interaction,
interdependence, and closure – as determining the development of social capital. These
characteristics correspond to the properties of an organization discussed earlier.
The factors of interaction and interdependence are derivatives of the organizational
properties of resources and exchange; and closure is derived from the property of
boundary. Time refers to the stability and continuity of the social structure of the
partnership. Thus, intended to function as one organization, a PPP is expected to
facilitate social capital formation.

4.2 PPP success factors and social capital

In this section, we develop our first proposition, which links the organizational
characteristics of PPP with social capital, and the critical factors influencing project
success. Social capital is generally understood as the goodwill that is engendered by
the fabric of social relations, and which can be mobilized to facilitate action. More
specifically, Nahapiet and Ghoshal (1998) define social capital as “the sum of the actual
and potential resources embedded within, available through and derived from the
network of relationships” and is collectively owned. They posited three dimensions of
social capital – structural, relational, and cognitive. Structural social capital consists of
 the quantitative parameters of the network ties of an individual or group with others. PPP outcomes
These parameters are density of the ties, their configuration, and their appropriability in e-government
or use from one context to another. Relational social capital describes the quality of
these ties, consisting of parameters like trust, norms and sanctions, obligations and
expectations, and identity and identification. Cognitive social capital provides the basis
for development of ties in a network, and consists of shared context, representations
and systems of meanings among actors in a network. 645
As mentioned earlier, the CSFs of partnership engagements point toward many
intangible factors – for example open communication, shared vision and understanding,
mutual trust, willingness to compromise and collaborate, respect, etc. ( Jacobson and Choi,
2008; Lambert et al., 1996; Lee and Kim, 1999; Mohr and Nevin, 1990; Salmond and
Spekman, 1986). The structural, cognitive, and relational dimensions of social capital
facilitate and relate to these success factors. The patterns of network ties refer to informal
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relationships between the members of the public and private organizations. The network
configuration can be understood as the extent of linkages of a member of the public/
private organization with members of the other organization at various hierarchical
levels. An example of the appropriable organization is the use of informal relationships or
friendships between members for generating innovative ideas to solve problems at work.
These connections promote information sharing, willingness to collaborate, conflict
resolution, etc., leading to mutual trust, open communication, and shared understanding,
which are the CSFs for PPP success. Nahapiet and Ghoshal’s (1998) relational dimension
describes the kind of personal relationships that individuals in the PPP have developed
with each other, and also with others outside. The quality of these relationships influence
their interaction and behavior, and lead to mutual trust, commitment, willingness to
compromise, and respect. The cognitive dimension, by relying on a shared
context, facilitates a common understanding among partners. Therefore, the three
dimensions of social capital facilitate and relate to the CSFs of PPP. The social capital
conceptual framework helps us to understand partnership outcomes, which leads to our
first proposition:
P1. Higher the degree of organizational characteristics in a PPP arrangement,
higher is the level of social capital formation influencing project outcomes.

4.3 Social capital, intellectual capital, and public ICT innovation implementation
In this section, we develop our second proposition, which links social capital with ICT
implementation challenges. E-government is a public ICT innovation (i.e. a creative and
imaginative government-led application of ICT) that aims to provide public goods and
services in new or significantly improved ways (OECD, 2011; Ravishankar, 2013).
We argue that the implementation of ICT, as an innovation process, is fraught with
challenges and problems, which can be addressed only through collective knowledge.
Social capital creates conditions that are favorable for the development of intellectual
capital “embracing both the explicit knowledge and the tacit knowing of a collective
and its members” (Nahapiet and Ghoshal, 1998, p. 248). In this discussion, intellectual
capital refers to the meanings, understandings, appreciation of the ways of problem
solving, competence to coordinate multiple activities and skills, information and
experience held by different parties, knowing the “possibilities for action, and the ways
in which action can be taken” (Nahapiet and Ghoshal, 1998; Penrose, 1995).
ICT implementation comprises activities culminating in the innovation becoming an
integral part of the organizational routine, ceasing to be new or simply being
 IJPSM abandoned (Bagri, 2004; Linton, 2002). The magnitude of the challenges faced during
29,7 the implementation of ICT adoption is reflected in its low success rate globally – a mere
15 percent of the initiatives have been fully successful (Heeks, 2005). This indicates that
there is a critical need to address the challenges through collective learning and
knowledge development, both at the group and organizational levels (Crossan et al.,
1999). There is consensus among scholars that knowledge could be created either in an
646 incremental or radical manner, and both involve new combinations – either combining
elements previously unconnected or by developing novel ways of combining elements
previously associated (Argyris and Schön, 1978; Kuhn, 2012; Simon and March, 1958;
Nahapiet and Ghoshal, 1998). This has greater relevance in the context of a PPP,
wherein the partners have different knowledge and experiences, by virtue of belonging
to different sectors (government and private), domains (administrative services and
technology services), and capabilities (social good and private efficiency). Hence, ICT
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implementation fundamentally involves creation of intellectual capital in the process of

addressing the challenges or problems encountered during implementation within an
organization. Social capital, through its three dimensions (structural, cognitive, and
relational), facilitates the creation of collective or social knowledge, through the two
generic processes of combination and exchange of various elements. This leads us to
our second proposition:
P2. Higher level of social capital formation leads to higher level of organizational
learning and development of intellectual capital, to address the challenges
encountered during ICT implementation.

4.4 Integrated framework

This section combines P1 and P2 into an integrated framework as shown in Figure 1
(social capital and intellectual capital block are adapted from Nahapiet and Ghoshal,
1998) and provides a concrete understanding of the elements in the context of PPP
arrangements in e-government.

PATH 1

Critical Success Factors

Explains

PPP as an Social Capital Intellectual Capital PPP outcomes

organization
• Experience
• Structural
• Intentionality Closure • Information
• Boundary • Competence to
Interaction coordinate
• Cognitive • Project
• Resources • Knowing objectives
• Exchange Interdependence possibilities for
action
Facilitates
Achieves
• Relational • Appreciation of
Figure 1. the ways to solve
Social capital Time problems
framework for • Meaning and
influence of Understanding
intangible factors
on PPP outcome
PATH 2
 As discussed earlier, conventionally a PPP is constituted as a separate independent PPP outcomes
organization, under a SPV structure. As an organization, PPP in the e-government in e-government
context involves processes of exchange of information, ideas, and resources between the
public and private sector partners. The common purpose of providing citizen services in
an efficient and transparent manner further promotes and heightens the interactions,
generating interdependence between the partners by breaking down the barriers of their
original organizational affiliations. This generates stronger ties, a shared context and 647
understanding, and deeper trust between the partners. The increased familiarity and the
consequent bonding, built over a passage of time, results in increased social capital.
Thus, the organizational characteristics of PPP build all the dimensions of social capital,
namely, structural, cognitive, and relational (Nahapiet and Ghoshal, 1998).
The implementation phase of an ICT innovation, especially in an e-government
context, is tantamount to treading uncharted territory. Hence, the PPP partners are
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likely to face novel issues and problems. Intellectual capital (refer Figure 1), which is
collective knowledge, largely in the tacit form, is embedded in the experiences shared,
while solving problems during the implementation of the ICT project. Collective
knowledge also entails extensive and intensive exchange of information between the
PPP partners, related to the process, people and the technology involved. It is also
pertinent to recognize the diversity of the nature and sources of information among the
partners, namely the governance procedures, the highly localized information
regarding the power and personal motivations of the functionaries, and the sources
and characteristics of the particular technologies and technical systems. To the extent
that the diversity of information proves complementary, the collective knowledge
formed by combining the elements of diverse information would be valuable in
addressing the problems encountered in implementing the ICT project.
Multiple agencies and government departments would be engaged in project
implementation, in the roles of managers as well as users of ICT. Coordination and
control of agencies, external and internal to the governmental set-up, could be a central
task of the PPP arrangement. The competence to conduct this coordination requires the
collective understanding of the nuances of the functioning of the government
machinery and the skills required for cutting through the formal and informal layers of
the governance structure. The shared understanding and knowledge could open up
new possibilities of action that are feasible, considering the contextual constraints of
having to operate within the governance framework. Therefore, intellectual capital,
resulting from a combination of diverse perspectives, knowledge, and experience of the
partners, is most productively deployed in the synthesis of solutions to the often
intractable challenges encountered during the implementation of an ICT innovation in
an e-government context. A smoother implementation is expected to drive project
outcomes toward the intended objectives.
This section has provided a tentative explanation using the social capital framework
(Path 2, Figure 1) as to how and why the CSFs (Path 1, Figure 1) are correlated with the
PPP project outcomes. We have argued that the PPP’s organizational characteristics
enable creation of social capital, which improves communication, trust, and willingness
to compromise and collaborate, mutual respect, etc. – the CSFs. The social capital, in
turn, facilitates generation of the intellectual capital, which is the collective knowledge
developed and deployed while solving the problems encountered during the
implementation of the ICT innovation resulting in the achievement of project outcomes.
To understand this framework better, the case of a real life e-government
implementation was explored. This exploratory case throws additional light on the
 IJPSM constructs, their attributes, and the relationships between constructs of the framework
29,7 in Figure 1. This case is not intended to serve as a validation of the propositions
formulated in this paper.

5. Project Nemmadi case study – PPP in e-government

Nemmadi was an e-government project initiated in 2004 by the government of the State
648 of Karnataka, located in the southern part of India (Das Aundhe and Narasimhan,
2012). Aimed at improving the transparency, accountability, and efficiency of the
government administration at the village level, Nemmadi was the first and the largest
G2C (referring to information, interactions, transactions, etc., between the government
and citizens) e-government project.
The governance structure in Indian states consists of the Principal Secretary of the
Revenue Department at the top of the hierarchy (at a state level) and the village
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accountants at the lowest level, with officials operating at the hobli[4], taluk
(see footnote [2]), and district levels in between. The village accountants traditionally
maintained land and other records related to the villagers. These records maintained by
the village accountants were not subjected to public scrutiny. Citizens had to seek out a
village accountant to get a copy of any certificate – a document required for many
common tasks, such as admission to schools or colleges, application for government
jobs, obtaining bank loans, and applying for benefits under various government
schemes. The method of obtaining certificates consisted of villagers applying for the
same with the village accountant, who then processed it through the various levels of
the state administration and handed it over to the citizen. The citizens’ total dependence
on the village accountant led to rent-seeking behavior by the latter.
The Nemmadi project, with its rural digital services[5] was intended to reduce the
exploitation of rural citizens at the hands of village accountants and other government
functionaries. It was an ambitious project conceived to cover 800 hoblis in the state.
These services were planned through telecentres located at the hoblis. Each Nemmadi
telecentre consisted of a desktop computer system, peripherals, and a human telecentre
operator. The operator entered the citizen applicant’s data. Each telecentre at the hobli
was connected to the nearest taluk back-office, which was in turn connected to a central
database at the State Data Centre in Bangalore. Nemmadi had taluk back-offices (176 in
total), where the citizens’ requests for services were processed. A PPP model was
adopted, wherein the two key entities were the e-government department of the
Government of Karnataka as the public partner, and Comat Systems Solutions (CSS), a
private equity-funded IT software services organization as the private partner. The two
entities set up a SPV named Comat Technologies, which consisted of some employees
of CSS and some e-government department officials. This SPV (referred to hereon as
Comat) was responsible for setting up telecentres in the hoblis, and operating them to
provide rural digital services to citizens.
The roll out of telecentres of Nemmadi was closely monitored and led by the then
Principal Secretary of e-government. He had decided on a big bang approach – 800
telecentres in hoblis across Karnataka, within a period of four months. He wanted to
launch Nemmadi before the end of his tenure in the department. Therefore, he floated a
request for proposals from private sector organizations that could setup all the
telecentres across the state. The deal was awarded, on the basis of lowest price quoted
in an open tender to a consortium of three organizations, set up in 2006. Comat began
the roll out of telecentres in November 2007, and had to face many challenges. The
following were some of the key challenges.
 5.1 Ramping up telecentres within a very short time frame PPP outcomes
The big bang approach posed several challenges – identification of the facility, leasing in e-government
the facility, and identification of telecentre operators. Comat faced many hurdles in
identifying facilities conforming to government specifications due to the lack of such
facilities in rural Karnataka. Moreover, landlords from the rival political party would
try to subvert the project by refusing to lease their property. Getting the lease
agreement in the government-specified format that was accepted over all locations was 649
also a challenge, as there were diverse norms, which varied from village to village. The
lack of educated manpower in the villages made it very difficult for Comat to identify
800 computer literate telecentre operators in rural Karnataka who could be trained on
Nemmadi software. The poor quality of telecentre operators resulted in numerous data
entry errors, which delayed the whole process of issuing certificates. There were also
stipulations for the number of women and handicapped operators to be hired.
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5.1.1 Meeting telecentre facility specifications. Comat also had to conform to the
telecentre facility specifications. For example, the facilities had to look identical – a
brick and mortar structure with a counter, VSAT[6] connectivity, standby power, etc.,
VSAT required proper electrical earthing, but electricians were hard to find at the hobli.
5.1.2 Managing service-level agreements (SLA) for setting up, operating, and
maintaining the telecentres. After the roll out, the e-government department monitored the
implementation and the operational management of Nemmadi through comprehensive
SLA. It had specific SLAs for setting up, operating, and maintaining telecentres – for
example the number of telecentres, taluk back-offices to be set up, and the number of
telecentre staff to be recruited in a month. The SLAs for telecentre operations were
classified into front-office and back-office measures. The former consisted of uptime of
telecentre devices, operator attendance, and payment of user fees at the front office, and the
latter consisted of cycle time of the back-office operator to process the application, and
exchange of data between telecentre and SDC[7]. There were additional SLAs pertaining to
deployment of an additional computer in a telecentre when the number of transactions
increased beyond the limit. Comat had to pay penalties, based on prefixed rates, for every
day of delay in these specified targets. However, most of the time, Comat had no control on
the reasons for delay, for example the availability of telecentre facility and operator
capability. Attrition among telecentre operators and unavailability of good data entry skills
were other major issues faced regularly. Remittance of user fees collected at the telecentres
also posed a challenge as there were no banks in the vicinity of many of the rural
telecentres. Telecentre operations were frequently affected by power and communication
network failures. Despite the above infrastructural issues, the e-government department
very strictly enforced penalties. Comat CEO said, “Despite our bringing the matter to their
notice, the e-government department continued to hold on to the SLAs in the request for
proposal. We should have been given some leeway in SLA reformulation. It should have
been a consultative and flexible process rather than a rigid one like it was.”
5.1.3 Motivating government functionaries. The attitude of the village functionaries
was a challenge to Nemmadi implementation. They did not follow the queue system
(first-in-first-out) for processing applications. They resorted to rent-seeking behavior
for speeding up the service and/or out-of-turn delivery. There were reports of instances
of the telecentre operators demanding extra payment from the applicants in collusion
with the government functionaries. Comat had to expend extra time and effort to
monitor and penalize such erring operators to ensure that the so-called “government”
culture did not seep into the organization.
 IJPSM 5.1.4 Managing process inefficiencies. The urgency with which the Nemmadi
29,7 system was implemented resulted in automating the “as-is” government processes
without re-engineering them. Therefore, the process inefficiencies continued and
resulted in erroneous certificates, delayed responses, etc. During peak periods
(e.g. college admissions), citizens used middlemen and applied political pressure to get
their job done. The impact of any processing error during the peak period was
650 amplified eroding the confidence of citizens in the e-government system.
After Nemmadi implementation, there were complaints about the longer cycle time
for procuring certificates. Citizens complained about the whole process having become
more cumbersome, lack of information regarding the status of one’s application,
dependence on middlemen for assistance at a price. Some citizens praised the system
too. Students did not have to miss school for days on end waiting for the certificates
(caste, income, etc.) during admissions. The telecentres were one-stop shops for caste
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certificates; train ticket bookings, and mobile phone currency recharge, and thus made
life easy.
In 2012, there was a change in Nemmadi’s private partner. Subsequently, in 2013,
the PPP was terminated, with the government taking over the entire operations.

6. Case analysis and discussion

6.1 Nemmadi case: project complexity, outsourcing, and outcomes
The Nemmadi e-government initiative was truly a large and long-term public
ICT innovation project for several reasons – it was the first and the largest G2C
e-government project covering 800 hoblis, and offering the rural citizens a range of
38 rural digital services. Most of these services were workflow based and therefore,
more complex than database centric services. Nemmadi, given the scale and scope, was
conceived as a transformation initiative to free the rural citizens from the traditional
stranglehold of the village- and taluk-level bureaucracy, and to provide digital services
in a transparent and efficient manner. The PPP arrangement was expected to
complement and build the government capacity through the infusion of finance,
technological skills and knowledge of the private partner. Thus, Nemmadi was an
e-government initiative with the defining elements of transformation and capacity
(Gronlund and Horan, 2004).
Nemmadi was implemented in a complex organizational context which involved
interactions and interdependencies among a multiplicity of stakeholders, namely
citizens; the three levels of the bureaucracy – the state, district, and village; technology
partners; and private officials involved in service delivery. This was fraught with
potential for conflicts, turf wars, coalition of interests based on differing goals
and perceptions, and individual resistance to change, as reported in the e-government
literature (Luna-Reyes et al., 2010; Hall, 2002; Joseph, 2010; Chen, 2010; Eynon and
Margetts, 2007; Gil-Garcia, 2012). The outsourcing decision was motivated by the
compulsion to rapidly roll out the telecentres before the transfer of the project
champion. The selection of the outsourcing partner was guided by the government
institutional process of open tendering with lowest cost as the award criterion,
arguably not sufficient for the kind of transformation and capacity expectations. These
organizational peculiarities are typical of the differences in the institutional practice
between the private and the public sector, in line with the reports in the e-government
literature (Gil-Garcia, 2012; Swar et al., 2012), with implications for the quality of
partnership relationship (Lee, 2001).
 Though conceived as a partnership, in practice, the outsourcing arrangement was PPP outcomes
mainly driven by the SLA stipulations. The e-governance department’s role was only to in e-government
monitor the private partner’s activities, strictly enforce SLAs, and collect penalty on
breaching. This orientation reflected the public sector’s institutional process of
procurement, which did not allow any change in the terms laid down in the original
tender document (Swar et al., 2012). Thus, the outsourcing arrangement was more
contractual than partnership oriented, influencing the project outcomes. 651
Although the Nemmadi telecentres delivered the certificates within the stiplulated
period of two weeks, there were citizen complaints about the longer cycle time, since,
earlier it was possible to procure certificates out-of-turn. The citizen complaints regarding
complex processes of Nemmadi highlighted the issue of “measurement timing” of
transformation outcomes (Brynjolfsson, 1993). The citizen complaint of manipulation by
middlemen could also be viewed as intermediation to bridge the digital divide by
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facilitating the illiterate rural citizens’ interface with the ICT ( James, 2004). Therefore,
intangibility of the intended project outcomes of transparency, efficiency, and
accountability in delivering public value (Gil-Garcia, 2012), and the complexity of
evaluation of the project outcomes (Taylor, 2007; Gupta and Jana, 2003; Irani et al., 2005;
Yildiz, 2012) were evident in the government’s decision to change the private partner
after five years of operation, and the subsequent termination of the PPP.

6.2 Nemmadi case: PPP, organizational characteristics, and social capital

A key premise of a PPP is that both partners combine their best innate characteristics
to offer a public good, while sharing the risks (Ramesh et al., 2010). However, Nemmadi,
was governed by comprehensive SLAs with rigid non-performance penalties. The
institutional approach to partner selection (discussed in the previous section), and the
arm’s length contractual mode of project governance resulted in poor interaction and
interdependence, thereby, hampering formation of social capital (Nahapiet and
Ghoshal, 1998). This lack of organizational characteristics in the Nemmadi project,
manifested in the challenges encountered during the implementation, and the manner
in which these were addressed.
The rapid roll out of the telecentres was the government champion’s decision, which
was thrust upon the partners. The intentionality being one sided, did not encourage
formation of ties between the two parties accounting for the low structural social capital.
Likewise, identifying a telecentre facility conforming to the challenging specifications was
considered to be the goals of the private partner alone. The e-government department had
assumed that its goal was mainly to monitor the private partner. Therefore, lack of
interaction and trust between the partners led to low cognitive and relational social
capital. In managing SLA too, government adopted a unilateral and inflexible process for
levying penalties on the private partner for deficiencies in telecentre facility, operator
capability, power and connectivity, many of which were beyond their control. This did not
allow any room for consultation and led to a distinct social boundary between the
partners, hampering internal exchange of information, identification, and trust with one
another. This accounted for the low relational social capital between the partners.
Thus, the PPP arrangement in Nemmadi did not fully exhibit the characteristics of
an organization, discouraging social capital formation between the partners.

6.3 Nemmadi case: social capital, intellectual capital, and ICT implementation
According to our framework, the organizational characteristics of PPP facilitate social
capital formation between the partners promoting combination and exchange of
 IJPSM resources between them, leading to knowledge creation. In Nemmadi, the social capital
29,7 formation was poor. The low levels of structural, cognitive, and relational social
capital between the partners, prevented mutual access to localized information and
the knowledge residing with the taluk-level government functionaries, and the
technological and management skills of the private partner. This precluded alternate
possibilities of action and hence innovative solutions to address challenges like meeting
652 telecentre facility specifications, setting up telecentres, improving processes, and
motivating employees to adopt Nemmadi. The low relational social capital also
prevented the exercise of co-operative and collaborative efforts by both parties to forge
a relational agreement compatible with the governmental needs, and operational issues
faced by the private partner. This would have led to a shared narrative and
understanding of each other’s roles. Thus, the challenges and hurdles encountered
during ICT implementation were not adequately addressed due to lack of developing a
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collective knowledge (within the PPP) based on combining and exchanging of

experiences, understanding, capabilities, etc.
Therefore, if the organizational characteristics of the PPP in Nemmadi had been
higher, it would have facilitated higher levels of social capital formation between the
partners. This, in turn, would have enabled the development of higher levels of
intellectual capital and its deployment to address the challenges that plague the
implementation process of Nemmadi leading to better project outcomes.

7. Conclusion and implications

This study is an attempt to explain how and why certain factors, which have been
reported in the PPP literature as the soft CSFs, influence the success of PPP models in
e-government, a public ICT innovation adoption. This study has developed two
propositions based on the extant literature of e-government and PPP, and used the
social capital theory to integrate the propositions into a tentative explanatory
framework. An exploratory case study of Nemmadi, a complex Indian e-governance
project was used to instantiate the elements of the proposed explanatory framework,
grounded in the extant literature.
This study has attempted to fill an important gap in the IT outsourcing partnership
literature, in general, and the PPP literature in particular, by proposing an explanation
for the soft critical factors of success of project outcomes. By locating the investigation
in the context of e-government, our study has addressed the major criticism that the
e-government research has been weak on explanatory power due to its overemphasis
on the outcomes (Yildiz, 2007). This study has also contributed to the social capital
theory by providing evidence of “knowledge content, including its quality” to the
intellectual capital dimension in Nahapiet and Ghoshal’s (1998, p. 261) framework. It
has also shared some insights on how knowledge can be exploited to address the
challenges and solve some intractable problems encountered while implementing an
ICT innovation. By choosing to focus on PPP as an arrangement, this study has
responded to Nahapiet and Ghoshal’s (1998, p. 261) “potential to extend our
fundamental analysis to other institutional settings, including those existing between
organizations.” Our study has made explicit the implicit assumption of presence
of organizational characteristics in the application of social capital framework in an
inter-organizational context (Inkpen and Tsang, 2005; Rottman, 2008).
This study has provided a useful pointer to public managers that PPP with a high
degree of organizational characteristics is an appropriate model for ICT adoption in an
e-government context, especially when the scope and innovativeness of the project is high.
 Our study has also highlighted the strategic value of creating new knowledge, not just PPP outcomes
transfer of domain knowledge (Rottman, 2008) from the vendor to the client organization, in e-government
as a powerful but lesser known benefit of a PPP (Li et al., 2005), among the more popular
benefits of the private sector’s efficiency and accountability and access to additional
finance (Hodge and Greve, 2007). The findings of our study imply that as a strategic IT
outsourcing arrangement for e-government projects, PPP could be more effective in
building the cultural compatibility, rather than searching for a vendor with one, that has 653
been reported by several researchers as an important driver of relationship quality
(Fitzgerald and Willcocks, 1994; Lee and Kim, 1999; Swar et al., 2012). Also, PPP provides
continuity of project leadership and maintains communication channels, in the context of
frequent changes and transfers of the public managers, which is characteristic of the
government institutional process (Gil-Garcia, 2012).
This study has a few limitations. The explanation is anchored purely in a social
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capital framework, since the interest was in understanding the how and why of the
intangible CSFs. It is recognized that there are other factors, especially the “hard” ones,
for example financial and technological, which could also influence project
implementation success. It is reasonable to presume that both “hard” and
“intangible” factors together determine outcomes. This paper hopes to have
illuminated at least one significant part of the path to success. It highlights that a
PPP does not automatically acquire the characteristics of an organization. It demands
deliberate attention to the structure and process aspects to infuse the spirit of a healthy
partnership and provide the requisite stability over time. This study also takes note of
the caution sounded by other scholars that the cost-benefit balance might not always
be in favor of social capital, resulting in resistance to change and encouragement of
conformity through “groupthink” (Bolino et al., 2002). Also, the Nemmadi PPP model
has been used only to exemplify/illustrate the conceptual framework proposed by us.
Future research should validate this framework through multiple-case designs and
longitudinal studies considering “success” as well as “failure” cases. Future research
could also investigate the relative importance of the four organizational characteristics
in the context of virtual organizations.
This paper has initiated a small beginning in the study of the PPP framework, which
is gaining currency as the favored model to implement major e-governance projects in
developing countries constrained for resources – physical, human, and intellectual.
Social capital has to be harnessed to achieve social goals by leveraging the intellectual
capital embedded in the partnership to drive the adoption of the ICT innovation.

Notes
1. We believe, there is always more learning from failure situations than successful ones.
2. Sub-division of a district.
3. A separate independent PPP company, under a SPV structure.
4. Large group of villages.
5. “Rural digital services,” a generic term used for any citizen electronic service in the rural
areas, included issue of certificates of several kinds (e.g. caste certificate, income certificate,
land holding certificates, etc.).
6. Very small aperture terminal technology.
7. State Data Centre – a repository of citizen data maintained at the state level.
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Further reading
Samii, R., Van Wassenhove, L.N. and Bhattacharya, S. (2002), “An innovative public–private
partnership: new approach to development”, World Development, Vol. 30 No. 6, pp. 991-1008.

Corresponding author
Madhuchhanda Das Aundhe can be contacted at: madhu.das@gmail.com

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