SECOND ANNUAL CONFERENCE ON COMPETITION AND REGULATION IN NETWORK INDUSTRIES 20 NOVEMBER 2009 CENTRE FOR EUROPEAN POLICY STUDIES, BRUSSELS, BELGIUM Open Innovation Models in Public Utilities as an Option to React on Reform Processes: The Case of the Postal Sector

Since the past decades, public utilities are undergoing profound reform (liberalization). The major motivation for such reform processes was and still is the belief that liberalization and deregulation stimulates, among others, product and process innovations, both of which are important vehicles for productivity and economic growth. The ability of any public utility to create and sustain competitive advantages nowadays depends on how well the firm deals with changes and manages to exhibit innovative behavior. Against the background of such reform, public utilities search for new innovation models so as to increase their performance and to ensure their profitability and growth. A possibility to adapt the innovation management of such companies are so-called 'open innovation models': ideas are no longer exploited just from inside the company but also from outside of it, as it is assumed that such purposive inand outflow of knowledge and resources result in better innovation performance. In this article we illustrate based on the case of the postal sector in Switzerland the impact of reform on public utilities‟ innovation management and analyze why and how open innovation models are a reasonable option for public utilities to react on reform.