This study examines how service innovation influences consumers’ perceived service luxuriousness and willingness to pay more. Service innovation influences willingness to pay more when service luxuriousness mediates. Type of service (functional vs. emotional) and level of brand equity (high vs. low) moderate the relationship between service innovation and service luxuriousness.

Despite the importance of technology-based innovation and customer participation for both practitioners and academics, the impact of different customer participation types in new product innovation has rarely been addressed. Since consumers' positive assessment of new technologies leads to positive outcomes in the market, consumer evaluation of new technologies is important. Thus, examining the consumer perception of technology-based innovation including the different levels of customer participation is meaningful to new theoretical and practical insights.