The challenges of radical innovation in Iran: Knowledge transfer and absorptive capacity highlights - Evidence from a joint venture in the construction sector

- The Iranian construction sector faces technology development issues.
- Franco-Iranian joint venture involving radical innovation with high standards
- Safety, quality, and planning issues engender delays, non-conformity and extra costs
- Low absorptive capacity hinders the assimilation of both tacit knowledge and explicit knowledge.
- A reverse learning dyad can offset an unsuccessful learning dyad through adaptation.

We investigate the collaboration between an Iranian and a French company in a joint venture aimed at developing radical innovation in the construction sector. We identify the challenges involved, the barriers to technological change, and the difficulties of transferring knowledge related to absorptive capacity.We conduct an in depth case study of a joint venture created by Freyssinet and Azaran to build a new roof to the Mashhad stadium. We conducted 41 interviews over a 19 month period.Our findings indicate that radical innovation is characterized by safety, quality, and planning challenges which engender delays, non-conformity to specifications, and additional costs. Freyssinet was unsuccessful in transferring explicit and tacit knowledge because Azaran suffered from poor organizational absorptive capacity. Its high absorptive capacity allowed Freyssinet to adapt its operations to Azaran's tacit knowledge routines.Our research is meaningful to the construction sector, an economically and socially significant sector in Iran that faces serious issues. Our study has practical implications for Iranian firms and for foreign firms operating in Iran. We contribute to strengthen the understanding of Iranian technology development by focusing on radical innovation standards, joint venture specific learning dyads, and complex knowledge transfer.