Carrots, sticks, or guidance? Analyzing coordination instruments for digital transformation in federations using a governance framework.

The challenges associated with digital transformation are exacerbated by the decentralized institutional structure of federations. The national government faces choices on how to coordinate with subnational autonomous governments' digital agendas while aiming to create an integrated digital government that functions seamlessly for citizens. This research paper applies a governance framework for analyzing federal approaches in driving digital transformation of subnational governments in the context of federations. The framework centers around the utilization of "coordination mechanisms" and "coordination instruments" by central governments to attain coherence, integration, and other desired results through three primary mechanisms: hierarchies, markets, and networks. The proposed framework is applied to analyze the coordination instruments used by the Brazilian federal government between 2011 and 2022. The empirical data draws from document analysis and qualitative interviews with federal and subnational executives. The findings indicate that the adoption of hierarchical approaches was restricted to certain legislative instruments, while the federal government mainly relied on a network approach by leading through example, political support to the agenda and sharing information. This soft form of coordination, however, may result in greater discrepancies among member states.