Measuring Performance of SMEs Service Firms: Customer Orientation and Service Innovation Approach

The purpose of this paper is to provide a framework to explain the role of service innovation in the relationship between customer orientation and firm performance. 142 participants were drawn from SMEs auto service operators. Mediation test estimates were applied to study the role of service innovation in the relationship between customer orientation and firm performance. The study demonstrates that customer orientation and service innovation contributes significantly to the performance of SMEs. However service innovation partially mediates the relationship between customer orientation and firm performance. The paper provides a very useful model for the implementation of effective customer orientation and service innovation projects in order to achieve high levels of firm performance. The paper fills a conceptual and practical gap for a structured analysis of the lack of research into the SMEs auto service industry. It contributes to the growing interest in the SMEs auto service industry by exploring the critical role of customer orientation and service innovation towards performance.