This paper considers the role of customer participation in the service settings. The inseparability, one of service characteristics, makes a customer participates necessarily in service delivery and production process as a partial employee. Many researchers have paid much attention to the variable of customer participation because of the characteristics of service which customers should participate in the service delivery and production process, and have examined what the relationship between the customer participation and service quality or customer satisfaction was. However, it would be difficult to know why and how the customer participation could influence positive customer outcomes if it were not examined about what the customer’s interactive and emotional factors which would be triggered by customer participation in the service encounter are. To look through the customer-employee interaction and customer’s emotional factors in the service encounter, this paper regards the service encounter as a social exchange context, that is, we consider customer-provider’s exchange relationship as a certain social exchange mentioned in ‘the affect theory of social exchange’ suggested by Lawler(2001). The above theory views social units as a source of emotions in an exchange task. In a service setting, the social units can be relationships between service providers and customers. In other words, there are also exchanges between an encounter employee and a customer in the service setting. Thus, it is more proper to check first the relationship between customer participation behavior and employee-customer interaction and customer’s emotional factors raised through the exchange than to check directly the relationship between customer participation behavior and customer positive outcomes. The important meaning of customer participation in service setting is that customer participation behavior can elevate the service quality through the interaction with an encounter employee. With the consideration of the functional/technical factors of service quality, it is suggested that customer participation could play a crucial role in functional service quality resulting in the elevation of the technical service quality. Therefore, understanding the effects of customer participation on the service encounter and customer’s different emotions in the service process becomes a good way of addressing the service customer functional participation. Just as numerous researches focused on the importance of functional quality, so identifying how customer participation affects the emotional factors is valuable in the same way to understand the role of the customer on increasing service quality. This research defines customer participation as the start of social exchange by applying the service exchange process based on the affect theory of social exchange mentioned the above. And then, we demonstrate the effects of “customer participation” on “communication quality” and “emotional empathy” as a global positive emotion to an encounter employee. And we check whether this global positive emotion can influence “service encounter satisfaction” or not. Additionally, we confirm that these customer’s efforts in the service encounter can have an effect on the service outcome, “relationship quality”. After all, we use LISREL program to solve our structured equation model. As results, customer participation was closely related to the variable of communication quality significantly which means the interaction between customer and encounter employee. It influenced also significantly the variable of emotional empathy which is manipulated as a global positive emotion in the relationship with a service provider. Sequently, the customer’s positive evaluation of emotional empathy triggered by customer participation influenced on the customer’s encounter satisfaction which accounts for the positive evaluation of the service encounter as well as communication quality. Also, communication quality had a positive effect on encounter satisfaction as we expected. Finally, this encounter satisfaction was confirmed as a critical antecedent accounting for relationship quality which represents customer’s trust and satisfaction to the service provider. Consequently, customer participation in service industry helps to form the emotional empathy to a service provider and it becomes an important determinant for the customer to form the positive emotion in service encounter. In other words, customer participation can be regarded as an important variable for customers to have the emotional empathy, encounter satisfaction, and relationship quality. The results of these relationships are in

. These results suggest some implications. Considering the influence of customer participation on the interaction in service encounter and the emotional elements, service organizations should inform their customers what service they provide and how customers can use their service “properly” through, for example, their online sites before the customers use the service. Service organizations should also prepare an education and training program for their encounter-employees because the encounter-employee’s role can be the most important thing for the customer participation. As a final implication, service organizations need to make a use relationship marketing approach. Service organizations can increase customer’s perception of relational benefits they provide with their customers, which lead customers to participate in service encounter more. Customer participation gives service organizations a chance to understand the customer’s needs. Thus, relational approach makes a customer participates in service encounter, and then this situation results in customer satisfaction and service quality.