Abstract: With the rapid development of information technology and significant changes of customer roles, firms' marketing concept has changed, the marketing function is accelerated and transferred to interactive marketing which is customer-centric. Interaction orientation is a rare resource for firms to obtain competitive advantage and superior business performance in the interactive environment, and interaction-oriented firm will achieve superior business performance. In this study, the customer-participation innovation which can reflect the customers' initiative and customers' belonging to the firms is included in the interaction orientation research scope, we reconstruct the interaction orientation-business performance framework, and based on the survey of 151 service companies from Zhejiang Province, theoretical hypothesis are tested by the structural equation model. The empirical results show that: (1) interactive orientation strategy can help the service firms to enhance the innovation performance; (2) interactive orientation has significant positive effect on customer-participation innovation; (3) customer-participation innovation has significant positive effect on the innovation process performance and innovation result performance, and it has indirect effect on result performance through the innovation process performance; and (4) customer-participation innovation has mediate effect on the relationship between interaction orientation and innovation performance.

Key words: interaction orientation, customer participated innovation, innovation performance, service company