Innovation today holds a distinctive position in economic policymaking, and innovations emerge within innovation systems. One of Iran’s sectoral innovation systems is the art–industry of machine made carpets. Despite its prominent status in the National Master Plan for Science and Technology, this industry has not met expectations in international exports. In this study, system dynamics methodology was employed to analyze the structure and improve the international export performance of machine made carpets, given the complexity and fluctuations inherent in innovation systems.
After constructing the model, 15 simulation experiments were conducted. The results indicate that none of the single dimension policies (such as entrepreneurship attractiveness alone or customer retention alone) are capable of producing the expected leap in global competitiveness. Rather, the combined positive effects of multiple engines of innovation constitute the key to successful innovation development. For example, in the pessimistic scenario, the combined strategy (Scenario 15) yields an international export share of 46.8 percent, which is significantly higher than any of the single dimension scenarios (with shares ranging from 3.92 to 30.66 percent).
Under single dimension policymaking conditions, the average outcomes of the three policy categories are as follows: entrepreneurship attractiveness at 29.19 percent, customer retention at 6.16 percent, enhancement of coalition activities at 5.51 percent, and knowledge diffusion at 3.92 percent.