Survival in today's dynamic environment requires organizations to have superior performance compared to competitors. In order to achieve this superior performance this study aimed to examined the effect of both strategic orientation and service innovation on operational performance, based on the resource-based view and dynamic capabilities theory of the firm, a model is developed to achieve the moderating effect of technological capabilities on the relationship between strategic orientation and service innovation and how service innovation mediate the relationship between strategic orientation and operational performance. The results indicated that there is a positive relationship between some dimensions of strategic orientation (market and service) and operational performance; also the results predict that a positive relationship between components of strategic orientation (market and service and learning orientations) and service innovation.