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Employees of different functional groups, through their professional network affiliations and service encounter with customers, are at the privileged position to transfer external knowledge and insights into the firm. Anchored in the perspective of the service-dominant logic and service innovation literature, employees and customers are regarded as operant resources that firms can use to develop more innovative knowledge and skills and thus gain competitive advantage. However, organizational conditions that empower employee to participate in the firm’s innovation projects is less studied and deserves more investigation. Using 247 sample of service firms across eight service sectors in Taiwan from a service innovation survey conducted in 2013, this study examines the role of corporate employee and customer participation play in the service development project that leads to service innovation performance. My investigation began by alluding that the entrepreneurial orientation (EO) of the firm and the innovation-oriented human resource management practices (IOHRM) are the two conditions necessary to empower employees to participate in the service innovation projects. Results confirm my hypothesis that both EO and IOHRM have a positive effect on employee participation, which in turn strengthen service innovation performance. Customer participation relates positively to service innovation performance but its hypothesized moderation of employee participation was not confirmed. The paper then discuss the contributions and implications of the findings and conclude with the study’s limitations and directions for further research.
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