813 THE SERVICE INNOVATION ON CUSTOMER ADVOCACY AND THE ROLE OF CUSTOMER PERCEIVED VALUE AND WILLINGNESS TO PAY Nursery Alfaridi S. Nasution 1* , Firdaus Alamsjah 2 , Elidjen 3 , Wibowo Kosasih 4 1 Institut Transportasi dan Logistik Trisakti, Jakarta, Indonesia 2 Industrial Engineering Department, Faculty of Engineering, Bina Nusantara University, Jakarta, Indonesia 3,4 Management Department, BINUS Business School Doctor of Research in Management, Bina Nusantara University, Jakarta, Indonesia * Corresponding Author: nursery.snasution@binus.ac.id Abstract. Innovation is creating something in order to maintain the competitive advantages. Service innovation is an increasingly and important factor in maintaining a company’s competitive advantage. This study purpose is to investigate the effect of service innovation on customer advocacy and also to find out the role of customer perceived value and willingness to pay for coffee on demand. The research was done on a start-up company that built an application for the customer to purchase online easily. The sample were collected from the buyer that used the application to purchase the beverages in one store of coffee shop X. The total of 293 respondents participated in this study. This study found that service innovation is not statically significant to customer advocacy, however, it is significantly positive when mediating variable (customer perceived value and willingness to pay) is taken into account. Keywords: service innovation, customer perceived value, willingness to pay, customer advocacy, start-up. Introduction Innovation is the buzz word that we have heard in our daily life, followed by industrial 4.0. Based on Drain & Schoonhoven (Drazin & Schoonhoven, 1996; Kanter, 1985) on (Johannessen, Olsen, & Lumpkin, 2001) innovation is creating something in order to maintain the competitive advantages. Innovation is considered to be more important to growth than other factors (Tidd, Bessant, & Pavitt, 2005). As we know, competitive advantage is one of the crucial things that company needs. Companies that emphasize on innovation will try to improve the fit between innovative offerings and customer needs. Previous study about innovation focused on various conditions such as technological innovation, process innovation, service innovation and strategic innovation. (Birkinshaw, Julian ; Hamel, Gary; Mol, 2008). Service Innovation is the company’s ability in gathering information from customers, gain value from it and utilize its knowledge (Srivastava, Fahey, & Christensen, 2001; Yeh, 2016). Service innovation is increasingly an important factor to preserve a company’s competitive advantages in service-oriented firms. Service innovations has become a major tool for competition in the market and to boost company’s competitive advantage and improving the company’s survival (Chen, Wang, Huang, & Shen, 2016; Lay, Schroeter, & Biege, 2009; Maglio & Spohrer, 2008; Tsai & Wang, 2017; Witell et al., 2017) (University of Cambridge Institute for Manufacturing (IfM) and International Business Machines (IBM), 2008) The goals of service innovation is on technology innovation, business model innovation, social organizational innovation and demand innovation to improve existing service systems (incremental innovation), to propose new value (offerings) or to create new service systems (radical innovation). Service innovation could also arise from new combinations of existing service elements, such as: cell phone, ATMs and ticket kiosks, bar