This study proposes a higher-order multidimensional construct of service innovation readiness (SIR) based on the organizational change literature and the awareness–motivation–capability perspective. Service innovation is gaining more attention due to its potential value for creating competitive advantage and improving organizational performance. This research conceptualizes SIR to consist of two adopting contexts (i.e., “strategic orientation toward service innovation” and “enabling mechanism of service innovation”) that, together, determine a firm's preparation to adopt organizational changes involved in service innovation. Six dimensions are also identified from a literature review and verified by industry expert interviews to define the two multidimensional adopting contexts. Data collected from 312 Taiwanese firms provide evidence to support the proposed factor structure of SIR and show that SIR positively correlates with SI performance. The findings contribute to the literature by theorizing SIR with a parsimonious structure that captures the complex conditions necessary for adopting service innovation. This study also yields some insight into the management of service innovation by providing managers an assessment that can be used to gauge a firm's status and direct its efforts in continuous improvement. ► We propose a multidimensional framework of “service innovation readiness” (SIR). ► SIR consists of “Strategic orientation toward SI” and “enabling mechanism for SI”. ► The results show that SIR has a positive effect on service innovation performance. ► SIR provides the firms a tool for self-diagnosis and guidance to allocate SI efforts.