Organizations are increasingly looking to tap into external knowledge sources through open innovation initiatives. Most public sector agencies are in the early stages of adoption of open innovation and are in the process of defining relevant issues. Once such issue concerns how open innovation strategies influence public sector business models. This study seeks to understand this interdependency. Building upon an action research study on crowdsourcing related to policies around telemedicine conducted in the Piedmont region of Italy, this paper highlights how public sector business models could be better aligned with open innovation strategies (in our case crowdsourcing). Our results indicate that in adopting a crowd-based open innovation strategy, the content, structure and governance dimensions of public sector business model need to be aligned accordingly. The content of the business model is altered to offer citizens a user-oriented value proposition stemming from a participatory process. The structure of the business model changes to include citizens as co-creators of public value and as key partners of the public sector. Finally, as part of governance dimensions, the study high-lights the role of non-monetary rewards to employees such as training and support staff.

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