Motivation Why, despite substantial investment in science and technology infrastructure during the last two decades, has Iran performed relatively poorly in terms of innovation and economic output? The investment has been wide‐ranging, from the inclusion of science and technology in the National Development Plans to the impressive growth in the number of science and technology parks and incubators. Iran is among the top five countries in terms of science and engineering graduates, and Iran's scientific publications are among the world's fastest‐growing. Purpose This study attempts to discover the reasons for this poor performance despite the investment. Approach and Method This is a qualitative study which tries to explore the research question through extensive archival data and semi‐structured interviews. We also use an inductive bottom‐up approach for data analysis, including open coding of collected data. Findings Our first level of analysis, based on National Innovation Systems studies, will show that there are two main causes: (a) Iran's industrial policies have been unsuccessful in encouraging domestic firms to export or exposing them to international competition. As a result, there are no meaningful incentives for them to approach technological frontiers by exploiting domestic science and technology infrastructures; (b) whereas universities and research centres have played an important role in the catch‐up process of other newly developed countries by engaging practically with the problems that face their societies, Iranian universities and research centres have become article‐publishing factories. Our second level of analysis will show that behind these two causes are other important latent factors: the power of incumbents and their efforts to maintain the status quo, and the “rules of the game” in the fields of science and technology which have discouraged hands‐on engagement. This study analyses strategic action literature, and proceeds to emphasize the role of incumbents and those “rules of the game” in inhibiting innovation and economic success. Policy Implications Effective innovation policy is not just about investing in science and technology infrastructure, but also about industrial policy, exposing domestic firms to international competition, overcoming entrenched interests and changing paths of career advancement in science and technology so that scientists are less inclined to pursue theoretical work and are encouraged to collaborate closely with business to solve practical problems.

Purpose This study aims to explore the emergence and development of new industries, especially in the context of developing countries, by considering industry emergence and development as a large-scale institutional change or transition. Design/methodology/approach The authors conducted an inductive case study research on the emergence of the biopharmaceutical industry in a developing country. The data on the emergence and development of Iran’s biopharmaceutical industry during 1990 and 2018 were collected through semi-structured interviews, participation in meetings, visits to companies and analysis of archival texts. The data analysis was an inductive and iterative process. Findings In the emergence and development of the biopharmaceutical industry, there have been a few key agents, institutional entrepreneurs (IEs), in both the state and private sectors, who played main roles. Moreover, the most important type of knowledge which has been crucial for the decision-making of IEs has been informal, tacit and institutional knowledge. Furthermore, the authors identified a mechanism, inter-institutional circulation, as being most effective in the transfer of institutional knowledge among IEs. Originality/value The originality of this study is applying insights from institutional entrepreneurship and knowledge management literature to the extant literature on industry emergence and development.

Motivation: Neither state planning nor economic liberalization has allowed developing economies to escape from the middle-income trap, owing mainly to institutional voids and hindering institutions. We need another explanation for development and the emergence of new institutions. Purpose: How have biopharmaceutical enterprises emerged in Iran, despite the obstacles faced? Can the collaborative agency of small groups of actors who know each other create new institutions and hence the conditions for biopharmaceutical firms to emerge? If so, who participates in such small groups, and how do they operate? Methods and approach: We interviewed 29 key participants and stakeholders in the Iranian bio-pharma industry. We used grounded theory to identify key themes. Findings: Bio-pharma emerged owing to the efforts of a small group who successfully worked together to master the technology, to overcome institutional obstacles and widespread scepticism within Iran, and thereby to create new firms manufacturing biopharmaceuticals. The group succeeded because it was morally committed to creating the industry; it proceeded pragmatically, experimenting and learning; and leadership was shared and collective. Policy implications: In this case, we see the inverse of a top-down process where government acts as principal and firms act as agents. Instead, strategic collaboration across government, university and firms, in a process of trial and error, has been able to make great progress to overcome obstacles to technical innovation that seem daunting for a middle-income country.