The Virtual Value Chain and E-Government Partnership: Non-Monetary Agreements in the IRS Program

Electronic government (e-government) models generally espouse the principle of partnership with the private sector. What is not always clear is what is meant by partnership, though, and how public organizations should organize and manage such relationships to support e-government initiatives. The paper relies on a conceptual framework of the virtual value chain to understand how a new form of collaboration emerged in the Internal Revenue Service (IRS) e-file program in 1999 and what dimensions helped to make it a success. As part of a larger, multi-nation study of public–private partnerships in e-government, this paper examines IRS e-file program, one of the largest, longest-standing (dating back to 1986), and most successful US e-government programs with tens of millions of users each year. The IRS e-file program experienced dramatic changes in its long-standing partnership with the tax preparation and related software development industries in 1999 and 2000. It is possible, using the concept of the virtual value chain, to understand how the IRS rethought its relationship with its private-sector partners. A combination of conditions in the market place, in US society, within the IRS, and among the private-sector partners helped to make this new model of collaboration quite successful. The paper concludes by examining how the dimensions of partnership in the IRS e-file case and the concept of the virtual value chain might enable other public organizations to reconceptualize their e-government partnership arrangements with the private sector using a new model of collaboration.