Compared to hotels, bed and breakfast (B&B) establishments have limited resources. From a resource-based perspective, the relationship between B&Bs and loyal customers might become a major source of competitive advantages. However, the understanding of the mechanism, by which resources embedded in customer relations are transformed into service innovations that might provide B&Bs a competitive advantage, is limited. This study investigates whether customer social capital and service innovation capability play a vital role in mediating the effects of proactive personality of B&B operators and B&B performance. Using a sample of 156 B&Bs from Taiwan, the results of structural equation modeling showed that customer social capital and service innovation capability are both mediating factors in the relationship between proactive B&B operators and their B&B performances. B&B operators with highly proactive personalities do not directly impact B&B performance, but instead foster customer social capital that facilitates the development of service innovation capabilities.
