Fountain cites a large number of  researches from economics, enterprise management, and new public management in the fourth chapter, because the network is too new to government research field for the author to find usable research results. Although network organizations emerged many years ago, such as those successful international firms, it is paid much attention in recent 10 years as a new organization form of enterprises. Fountain wants to examine the implications of the increasing use of networks for the structure of the state and the policy making  process. It is an interesting and valuable challenge.

"In contrast, networks within hierarchies, or intrao-rganizational networks, subsume relations between and among actors under governance structure that handles conflict resolution and channels behavior. " At first, the author leads the reader to understand network as a organization form neither market nor bureaucracy. Yes, it is between them. "The social structure of bureaucracy----that is, flows and networks of informal communication, influence, and advice-----is as important to the policymaking process as the formal structure." ..."Ronald Burt has demonstrated empirically that power, in the form of social capital, accrues to individuals who straddle and broker among disparate professional networks. Individuals in these positions possess access to especially useful information unavailable to those working within one network and can play a brokering role among structurally distinct network constellations." This is only a primary analysis on the benefits inherent in networks.

Then the author discusses the central elements of the inter-organizational network. Then what are they? Coordination because of the trust among the members of a network, but not consequently, lower transaction costs, better resource sharing, increased learning among network partners, and great level of innovation. "Rather than leaving the flow of benefits to chance of goodwill, reciprocity ensures that benefits from coordination flow to each organization. Organizations form networks to pool resources and share administrative costs. They use collective action to stabilize resource flows, cycles, and other uncertainties by standardizing procedures. "..."The successful formation of cooperative networks requires that actors value the long-run network relationshp highly enough to divert resources and attention to network formation and to forgo immediate individual gains." so too high trust will results in a low cooperation. For the government, it is more difficult to develop inter-agency networks because of the slow flow of information, stiff systems and other factors. "If the virtual state is a network state that uses the Internet as a technological and information infrastructure, policymakers cannot exercise control over its development without understanding both the characteristics of networks and their developmental process. Central to their development and maintenance is social capital".

Social capital is a popular concept in social science and management field in recent years. "Social capital is among the chief benefits of cooperation and a product of well-functioning networks."..."Social capital, like other forms of capital, accumulates when used productively."..."The central elements of social capital are trust, norms, and networks." "Closely related to accretion is the self-reinforcing cyclical nature of social relations."

Networks, technology and innovation have a inherent relationship. Their impact on bureaucracy are at last portrayed. "Networks in government rely on budget-making and oversight process for funding and rigidly to allow network formation to develop in response to opportunities and problems. The internet as catalyst to network formation simply makes the mismatch of speed between the institutional structures of government and the linkage afforded by the Internet more problematic. " In a network, agencies increasingly require more rapid access to knowledge and stronger innovative capacity.

"When the knowledge base that supports an industry is hard to comprehend, still emerging, and distributed across several organizations, then collaboration among firms, universities, and national laboratories will reflect a strong and fundamental interest in access to knowledge rather than simply strategic calculation, resource sharing, or transaction cost reduction." But the government is different from market organizations. "This ability to preserve competition while encouraging cooperation to develop cross-cutting agency and policy capacity is one of the chief challenges underlying the move to G2G web-based initiatives in the government. The central difference between sectors lies in the incentives and rewards for network formation". I do think that the incentives and rewards are the biggest difference between the private sector and the public sector, so it is really difficult to migrate the modes simply from market to government. This also shows the corner in public management research. The researchers in public field hope to get feasible experience from enterprises, for example, NPM as one of the test, but the failure is not impossible.

Then the author tries to find the relationship between social capital and informational capital. This is really another interesting subtopic. They are different. "Social capital provides decisionmakers with information benefits beyond access to shared information on the web." So they can not substitute for each other. Those specific, accurate, important, and implicative information comes from social capital instead of informational capital. "Social capital encompasses not only shared access to information but also many positive properties of interdependence, including shared values, goals, and objectives; shared expertise and knowledge; shared work and decisionmaking; shared risk, accountability, and trust and shared rewards. Social capital increases the ability to build and use informational capital." Yes, I agree  on this point.

What will the author think about the relationship between the Internet and social capital? That should be the target of this chapter. "However, the investment from federal government have not yet catalyzed extensive cross-agency networks in government. As we learn our way to a virtual state, the more difficult investments i n information infrastructure for both the state and the economy will not be hardware but software and institution-building. " Institution building, yes, it is the most difficult thing in the world.

If the social capital has some limitations, what is it? "When conditions are less than optimal-for example, when trust among network members is either too great or too small, or when social ties restrict sound decisionmaking---some types of productive capacity are diminished." Power will exist in networks. "Power in networks is often conditioned on 'organization size, control over the rules governing exchange of material resources and information, the ability to choose a do without strategy, the effectiveness of coercive strategies, and the concentration of inputs."

The conclusion is, perhaps you have guessed out, "Information technology does not, and cannot by itself, create social capital or cooperation, in the absence of a base of trust; but if easier communication and coordination lead to enhanced trust, then the Internet contributes. The internet does not, however, substitute for the development of social relations. A government that forces network formation but eschews collaboration may increase, rather than decrease, the costs of coordination. In such a scenario, poor institutional design, not technology, would be the culprit." Institutional design!

Building the Virtual Sate: Information Technology and institutional Change. Washington, D.C. :Brookings Institution Press, 2001

 

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