This paper emphasizes that innovation in the service industry comes from using knowledge as well as conviviality. Applying an econometric model, we employ cross sectional data for 3-digit Taiwanese service industries in 2001 to measure conviviality. The indicator of conviviality allows us to assess the relationship between conviviality and changes in profit and employment in Taiwanese service industries from 1996 to 2001. This paper finds that conviviality has a positive association with employment change in Taiwanese consumption-based service industries. We classify consumption-based service industries into three groups according to the distance between customers and service providers. There is a salient correlation between conviviality and the change in the number of firms in the short-distant group. These empirical findings confirm predictions of the theoretical model of conviviality provided in this paper.