Abstract: The special features of service innovation network require new form of governance mechanisms to address its challenges. From the relational perspective, the existent studies ignore the effect of formal institution in the innovation networks. The impact mechanisms of nework govenance on service innovation are still less discussed. We clarify the differences of innovation network governance mechanisms in knowledge intensive services: Institution-based relational governance and Emotion-based relational governance. We explore how service companies improve service innovation by designing proper governance mechanisms. A theoretical framework of two process of multilateral non-linear coordination and highly embeded knowledge mobility are established to show the relationship between network governance mechanisms and service innovation. The emerging theory of service network governance and its implications will help us get more understanding of innovation strategy and competitiveness in knowledge intensive services.