Abstract:Service innovation is an inevitable choice for the service transformation of most manufacturing enterprises. Customer participation innovation provides infinite possibilities to improve the service innovation performance of manufacturing enterprises. Facing the whole process of service innovation activities, a theoretical model of “external drive-internal motivation-behavior generation-innovation performance” is constructed to solve the improvement of service innovation performance. Based on this model, it analyzes and considers the mechanism of internal and external incentives and customer participation innovation on service innovation performance, and puts forward assumptions. 210 service manufacturing enterprises and their customers are selected as samples for empirical testing. The study found that: 1) Both external incentive and internal incentive have significant positive effects on the service innovation performance of enterprises, but the size of the impact is different. 2) Conceptual consensus, knowledge sharing and knowledge co-production have significant positive effects on the service innovation performance of enterprises. 3) Customer participation innovation plays a complete mediating role between external incentive and service innovation performance, and customer participation innovation plays a partial mediating role between internal incentive and service innovation performance. The test results show that the reasonable use of incentive strategies in the manufacturing industry can promote the generation of customer participation innovation behavior, so as to achieve the improvement of service innovation performance in traditional manufacturing industry.