Numerous studies in the field of service marketing focus on the pivotal role of customer participation in the service delivery and production process. Customers actively contribute to the creation and consuming of value, making their involvement crucial for successful service delivery. It is natural that customer participation is closely related to interaction with service employees. This is because customer participation may be an interaction itself at a service encounter with a service provider. Previous studies have divided each variable, such as customer participation-service encounter interaction-employee behavior. But in reality, employee behavior and customer behavior themselves should be considered interactions. Therefore, this study would like to investigate whether in- and extra-role behaviors of employees affect relational development through interaction with customers. In addition, in consideration of the characteristics of the reciprocity of service encounters, this study would like to examine the mediating role of customer participation in the process in which employee behaviors affect relational variables. The findings of this study reveal that employees' in-role and extra-role behaviors have a direct and positive effect on customer participation and relational variables. Considering the behaviors of customers-employees as an interaction of a service encounter, it was demonstrated that customer participation has a partial mediating effect in the process in which employee behaviors affect relational variables. Service firms pursuing relationship marketing encourage their employees to promote relationship development with customers, but it should be recognized that it requires a medium of customer participation. Therefore, if service firms want to induce an active customer participation, they should support employees to play their roles more actively in the interaction process through internal marketing. This creates relationship development with customers.