A New Vision of Community and Economic Development: A Multidimensional Convergence of Government, Business, and the Social Sectors with the Internet

Stan Skrzeszewski, CEO, Canada's Coalition for Public Information

Maureen Cubberley, Deputy CEO, Canada's Coalition for Public Information


This article presents a new vision of community and of networking, and demonstrates how the combination of these two concepts can produce a new model for social and economic development based on the Internet.

Societal convergence

We all understand that the evolving Internet is a result of the convergence of a range of technologies and of technological applications. What is less understood is that the coming of the Internet, and all that the information highway metaphor entails, has also created a social convergence of three societal sectors. In the pre-information age era, we had two clearly defined sectors, that is, the profit or private sector and the government sector. Although we have always had a third sector, that is, the nonprofit or voluntary sector, its role had been absorbed to a large extent by the government sector and had been marginalized thanks to the self-indulgence of the "me" generation and the economic good times of the 1960s and 1970s. The coming of the information age, along with the pressures resulting from our current economic problems, has resulted in the re-emergence of the social or voluntary sector. The voluntary, not-for-profit or, as we prefer to call it, the social sector, is still only partially understood. Let us state from the beginning, that the not-for-profit, voluntary sector is not entirely voluntary, nonprofit, nor social. In some ways, it is the precursor of what we see as the convergence of the three sectors or at least the blurring of the roles of the three sectors as we move to a more unified community approach to our social, economic and cultural aspirations--a kind of free-trade agreement between the three sectors.

The three sectors

The guru behind the three-sectors concept is Peter Drucker. We would suggest that you read an article by Peter Drucker that appeared in the November 1994 issue of The Atlantic Monthly entitled The Age of Transformation. It describes the growing importance of the nonprofit or social sector. Drucker claims that in the information age "government cannot be looked to for solving social and economic problems." The old communities of family, town parish and so on have been replaced by a new unit of social integration, that is, the voluntary and nonprofit organization. Who takes care of the social challenges in the information society? Not governments, which did so in the industrial age, but the new social sector. Drucker divides society into three sectors. They are: the public or government sector, the private or business sector, and the nonprofit or social sector.

He claims that the organizations within this third sector will take care of the social challenges of a modern society. The social sector will use the assets of the community, that is, its social capital or its leaders, the skills and compassion of its people, and its resources to deal with community issues.

Within this model, the government sector demands compliance; it makes rules and enforces them, and it distributes wealth. Business creates wealth by providing products and services and expecting to be paid for what it supplies. The social, nonprofit sector aims at changing the human being, at creating human health and well-being. Although these observations are manifestly correct, the role of the social sector is still largely unrecognized by government and business, and the social sector has not yet restructured its management or governance to reflect their changed significance. We believe that Drucker does not take his analysis far enough. We agree that we are seeing the emergence of a third sector in society, but we think that the answer to social, economic and cultural issues does not lie with any one sector as suggested by Drucker but rather rests with all three sectors, each fulfilling a specific role but working in a coordinated way with one another. They are but different facets of the same community.

The relationship between governments and the social sector

We must make sure that the development of the third sector does not become just a dumping place for hard-pressed governments. Government must not be allowed to co-opt the social sector in order to cover for its own shortcomings. The relationship between the government and social sectors must be based on mutual support. It cannot simply be an off-loading area for government deficits.

That is not to say that government should not be redefined. A variety of trends, such as the changing workplace and family, has lead to a continually growing reliance on government to take care of our social needs. This has continued to the point where individuals and communities have abrogated their responsibilities and left themselves incapable of dealing with general social issues, and to the point where governments no longer have the resources nor the capabilities (which they may never have had), to meet community needs. What we are witnessing now is a reversal of this trend with responsibility and control flowing back to the community. This restructuring in government and government-funded institutions will continue and the effects will be felt for the next decade.

As governments at all levels find it more and more difficult to deal with the social and economic issues, it becomes more and more obvious that we can't turn to governments for solutions. There has also been a major loss of trust in political systems. People don't want services they have not asked for. People and communities want to, and will do it, for themselves. Citizens must see themselves as responsible for their own well-being and must stop depending on government for innovation and leadership. We must draw upon our own sense of creativity and seize opportunity. As citizens, we can no longer accept personal rights and leave all responsibilities to government.

Governments will continue to download from federal to provincial to municipal to the community, where the solutions will inevitably be found. These solutions depend on the right information being available to people at the community level. Community networking is essential to the community-based approach to social problem solving.

Although governments will not deliver community services to the same extent as in the past, they must do more than download. They still have a major, and in many ways a new role to play. They must establish appropriate public policies, set standards, and provide finances to community organizations to perform the necessary tasks. A main role of governments is still wealth distribution in order to create some equity in the system. They also have to create the tax policies to encourage information technology companies to locate in their areas and support the development of home-grown talent and new ideas.

This includes low personal taxes that will attract information technology (IT) managers and workers. IT companies have to be able to capitalize research and development costs. A good information technology sector must co-exist with a good community network sector if both are going to succeed. This is a working example of the interlocking dialectic that characterizes the new societal convergence. We have to find a way to finance community networks and operations and to enable community networks to do research and development.

Community organizations, too, will have to rewrite their mandates. In the short term, with dwindling or stagnant revenues and increasing community needs, community organizations will have to define their roles as community catalysts and change facilitators, and find a variety of ways, such as entrepreneurship and partnerships among the government, business, and social sectors, to get the job done. Ongoing dialogue with other community organizations is the key way in which each organization can find a variety of partnerships and innovative approaches to providing the services and solutions required.

The importance of a community approach

A community is defined by a bond that holds together human beings, whether by language, culture, history, experience or locality. Community values include: [Nozick]

We are a community of individuals formed into organizations. A community consists of many political, business, service and benevolent organizations from the three sectors, at different tiers, that allow individuals to exercise control and influence within their community. Organizations allow us to exert individual direction and responsibility on society. The community organization is the basic building block of government, of citizenship or social responsibility, and of business and economic activity. Since we are a mobile society, it is now organizations, rather than individuals or families, that provide the permanence and continuity for a community.

Every community is comprised of groups or organizations where special interests are frequently at variance. Community does represent people coming together voluntarily to maximize their self-interest (Hobbes). However, the interaction with other members of the community brings people to the realization that their immediate self-interest generally depends on the common good and thus their self-interest becomes enlightened self-interest. Without organizations, communities would be unable to achieve any set of goals. Communities are, organizations do.

Organizations are special-purpose institutions. They tend to concentrate on one task. Only a clear, focused and common mission can hold the organization together to produce results. Individually, they have only limited potential within a narrowly defined field. It can be argued that our communities have disintegrated into special-interest groups, that is ghettos of similar ideas and values (Utne) and that the traditional concept of community is no longer valid.

There is truth in this assertion. However if organizations unite to pursue common goals that are clearly focused, then they can produce results that will have an impact on the entire community. Communities share common values and deal with common problems. By bringing community groups closer together, the services provided will have more to do with resolving community problems by creating a common focus. In these difficult times, it is important to move back from the "me" approach of the "me" generation to a community approach.

New community development models

The matrix community model

The matrix community model recognizes that the future of each community organization, from each sector, is correlated to the others in the community and that common action and cooperation will yield better results. Each organization in the community represents a specialization and is an autonomous body. Individually, they can pursue their specialized tasks. However, only by coming together in the community, as part of the community team, can these specialist organizations really serve the community. Individually, most organizations consume more community resources than they produce. Together they will produce more community resources than they consume.

The community provides a matrix of specialized, autonomous organizations that belong to all three sectors of society. To deal effectively with a specific community issue using the community convergence model means bringing the right group of organizations together for joint performance. All of them have to think through their role in dealing with the issue and develop strategies to resolve the problem.

Some claim that the communities can self organize around the Net. This may be true of "virtual communities" but what we are discussing here are real communities inhabited by real people in a common place. Some believe that a virtual community can progress without the necessity of leader/follower relations. I believe that in an actual community, one organization must manage the overall process and this position of management should change depending on the issue. What is clear is that power and decisionmaking will shift from a top-down hierarchical model to one that is broad based, participatory and nonhierarchical.

In this model, the business community must take on some social responsibility and the social sector must take on some business responsibilities for the good of the overall community because together they form the community.

A community network makes the job of coordinating community development and of maintaining community-wide communications tenable. The Internet can provide the necessary energy and glue to create community leaders and to re-energize the community for group action. It provides the tool that can lead to increased communication that will enable community consensus. In the last few decades, we have lost our traditional sense of community. Community networking gives us the opportunity to rebuild that sense of community.


So far we have taken the concept of networking for granted. Although networking is a part of everyday life, it is a complex process. Each one of us participates in a variety of networks. Networking is a process, and in some circumstances process solutions are more relevant, cost effective and long lasting than content solutions.

The most effective networking solution for community and economic development depends on process and not on content. Networking is a process through which the community can cultivate human networks and human interaction. These human networks can use information and communication technology as the infrastructure for efficient and effective networking in areas beyond technology

Value chain

In a networked organization or community, value is added by passing on requests through the networked organization to continually changing teams, or groups of individuals, where value is generated by passing the request through the open network. This concept is defined as a value chain by Michael Porter and as a value network by Don Tapscott (p. 33). Information value chains acknowledge the packaging effect that information technology and systems have on information. The information value chain transforms data into information and information into knowledge as people develop the concepts, add experience, and package the information as it moves along the chain. Value is generated through an ever-changing open, community or organizational network.

Information gains value because it is:

Elements for success in a community network

The following elements are essential to the success of any community network:

The role of the community network

Following the three-sector model of society, the responsibility for the development of community networks rightfully belongs to the social or nonprofit sector. However, the model also requires that the social sector must work in partnership with the other two sectors. Governments must set policies, establish standards and provide funding; and the business sector must act as an expert enabler and as a provider of resources.

There are several ways to develop an electronic network in the community. One is by establishing a community net. Community nets are established as nonprofit organizations, but they may charge a fee. Community Nets, with their focus on local public interest information-sharing and communication, are not just "on-ramps to the information highway," they are also the local "commons." They provide an electronic location for the vast amount of public- interest information available within the community through various agencies, organizations and individuals, and they provide community access to that information. What is perhaps even more important is the role they play in providing the community with an opportunity to discuss itself, on-line.

The second form of electronic network is the Freenet. Unlike community nets, it tends not to charge fees. Freenets are more than a development, they are a movement--technology with a mission. The Freenets are grass-roots, volunteer, efforts to collate community knowledge and experience, leading to a bottom-up sharing on a national and global basis, but starting from a neighborhood-by-neighborhood approach. Freenets also provide an electronic "commons."

The third model we have seen is the Municipal net. Municipal nets are established by the municipality as a public utility. Municipal information is shared among departments, and municipal services are provided on-line to the public.

A public-access point, or points, is an essential feature with all three models.

Because public access is critical to the implementation of the convergence model we are discussing tonight, and because community nets offer a stability that freenets can't always provide as well as the public accessibility that is not an inherent part of municipal nets, the following remarks are focused on community nets.

Community networks simplify (Sternberg) access to government and municipal information and business assistance programs. They can form the basis for an electronic marketplace. The network will provide access to research, whether it be located locally or on the other side of the globe.

Community-based economic development

Local economic development depends on financing small and medium-sized companies at the community level. Partnerships depend on a planning process that involves and empowers all sectors of the community. Today, local economic development depends on a strong local infrastructure, specifically a communications and information infrastructure.

Community economic development strategy

  1. Strike a community economic development forum to develop an economic development plan, including representation from the three sectors.
  2. Establish an economic development network.
  3. identify existing telecommunications capabilities and skills.
  4. Develop a local, coordinated, communications infrastructure, address local connectivity, and identify any impediments and barriers to its development.
  5. Promote the existing and planned telecommunications infrastructure as part of the economic development strategy.
  6. Commit to the ongoing development of people in the community in the use and application of telecommunications.
  7. Develop an Internet presence with consistent procedures and navigation procedures.
  8. Provide accessible one-stop shopping to municipal and related services.


  1. To create worldwide (more targeted as appropriate) visibility for the community.
  2. To promote the area as appropriate for government service, business, industry, tourism, resources, and the arts.
  3. To provide efficient workforce retraining and basic skills training.
  4. To provide sources of data and information.

Community networks and community economic development

We think it is critical that all communities adopt a two-pronged agenda linking community network development and economic development. The two go hand in hand.

The forming of a community network should be a key plank in any municipal or regional economic development plan. That may seem obvious. Nonetheless, we seem to have created an artificial split between business and the community. It is important to remember that there has always been a marketplace in the community. The Internet, as an open and interactive system, combines community and marketplace. There is an important role for business in preparing the community for the Internet. The real value of the Internet can be tapped only if your community, including business in the community, has an effective on-ramp to the Internet.

Community nets also offer an inexpensive way for businesses to familiarize themselves with Internet technologies and opportunities. A community network will lead to the development of increased and improved communication among businesses through e-mail and will result in a business network within the community.

Establishing partnerships

Community-based economic development is a powerful force for energizing people. Community-based economic growth is based on partnerships. There is tremendous value in partnerships with the municipality, educational institutions, chambers of commerce, schools and libraries. These organizations tend to have computing power and expertise at hand. Libraries specialize in information management skills. Those businesses that are engaged in information technologies are undoubtedly valuable partners.

A Networking Ventures Model (John Fenner):

We can network local people, but to do what? The free flow of information, in and of itself, won't lead to economic development. We would like to present a model for your consideration. This model works from an economic development perspective. It is equally valuable as a model for social or for cultural development. The concepts are the same. Only the applications vary.

To date, community networks have focused primarily on one community resource, information. There are many other resources, including financial, managerial, technical and entrepreneurial resources - the resources mentioned earlier in the context of establishing partnerships.

For a community network to be more than an information transfer mechanism, it needs to become involved in the process of connecting individuals to the full portfolio of resources available in the community. Community networks are about cultivating human networks and human interaction even when the focus is economic, social or cultural development. This is where the economic power of community networking resides.

The Networking Ventures Program is a community-based initiative, sponsored by the community, designed to identify business opportunities, create new ventures, and increase local employment.

The three programs within the Networking Ventures Program are:

  1. The Opportunities Catalogue: A continually updated electronic document, published in hard copy at least annually, that identifies local business opportunities and local resources available to act on them. The focus is on ideas, talents, ventures, projects, and services that are innovative, unusual and suggest alternative approaches.
  2. The "How To" Exchange: The network of people helping people, which matches local expertise with local needs for expertise. People register their talents, abilities, experience, and interests they are willing to share, sell or exchange [overhead of Burks Falls LETS Exchange]
  3. Entrepreneurial Business Formation and Development. This program provides a meeting place for prospective and present members of the entrepreneurial community. It facilitates the application of local expertise and investment to a beginning or developing business.

The four portfolios are:

  1. Portfolio of Investors--An electronic registry of individuals, groups, institutions, and corporations who wish to invest in new or expanding local entrepreneurial ventures.
  2. Portfolio of Entrepreneurs--A database of individuals with good ideas who require financial and/or managerial support to begin businesses.
  3. Portfolio of Investments--Established businesses that require more investment to improve and/or expand their operations.
  4. Portfolio of Expertise--A registry of people and organizations, with specific managerial or technical skills who want to make their expertise available to local ventures.

The two targeted projects are:

  1. Local Business Problem Solving Network--A business network used to create on-line discussion groups aimed at solving local business problems or developing strategic directions for local economic development.
  2. On-Line Products to Business Project--Businesses, through the Chamber of Commerce, local economic development board, community opportunities initiative or whatever is appropriate to the community, create an electronic inventory of business assistance, information products and provide on-line access.

Information infrastructure as community capital

Attracting a new business to an area is always difficult, and decisions are often based on the quality of the infrastructure that a town or city can offer. In the near future, a networked business venture information infrastructure will be just as important as serviced commercial lots and tax incentives are today. Community economic development can include large corporations, although this has not been the established tradition. Larger companies can be involved through joint ventures, financial contributions, sharing expertise and other ways. The process of involving large corporations must begin with dialogue. The local networking community must become familiar with the local investment and business community.

Community Networking is the Backbone of Global Commerce. Although our emphasis has been on creating the local on-ramp to the Internet, we want to bring to your attention yet another comment by Peter Drucker. He says that in any economic development policy it is critically important to give consideration to the community's competitive position in a world economy. Jim Carroll, author of the Canadian Internet Handbook, says that the Internet is the backbone of global commerce. The Internet does provide links between computer networks at organizations around the world and Internet e-mail has become the de facto means of communications between different e-mail systems.

Any local strategic economic activity will improve the local competitive position. The Internet opens the door to global economic activity for everyone. That's an important door to open because even though, ideally, we would like to have self-sustaining local economies, the fact is we don't. There are only a certain number of people in the community who constitute the market for any given product or service. Growth depends on expanding the market. When building local on-ramps, you must be aware that this is giving you a position on the global Internet.

It must also be noted that in connecting with the globe you must make sure that you do not give up your local values for global ones. This is what is causing the decay of local communities in the first place. It is not an either/or situation. Global values can be brought in to enrich local values, but one should not exclude the other. "Think globally; act locally."

"New communities require an act of imagination and what must be imagined is the idea of the new community itself."
Adapted from Benedict Anderson's Imagined Communities.