This empirical research investigates the influence of service innovation on the performance of service SMEs, especially within the context of a country with an emerging economy as it is the case of Mexico. Data were collected through a survey instrument designed and distributed among service SMEs in the Aguascalientes state of Mexico to test a hypothesis formulated from the literature review conducted. The instrument was validated using Confirmatory Factor Analysis, Cronbach’s alpha test and the Composite Reliability Index to ensure its reliability. The hypothesis was tested using structural equation modelling (SEM) using an as input 308 valid responses obtained from the survey. In general, the results obtained show that service innovation has a positive and significant effect on the performance of service SMEs. Specific research related to service innovation in service SMEs is limited. This paper therefore fills this research gap by expanding the limited body of knowledge in this field.