Determinant Factors of Absorptive Capacity and Innovation in Iranian Economy (Case Study of Iranian Industries)

Industrial manufacturing companies can have a vital role in creating, developing and applying innovation in the production process. In this paper, we analyze the absorptive capacity and innovation in Iran. Moreover, this paper addresses to determinant factors of R&D activity as a proxy for absorptive capacity and innovation in Iran's industries by using dynamic panel data approach (DPD) for the period of 2009-2013. The sample data are collected from all industries classified in two-digit codes of ISIC that include 23 industries. The results show the firm size, labor productivity, and value of production and export are determinant factors of innovational activities in Iran's industries. Therefore, we suggest some policies such as support of labor education by companies, integration of companies and support of increasing firm’s size, improving relations between domestic and foreign companies, encouraging companies to expand the export activates and support of productive activates.