In this article, we probe the issue of information and communication technology development in Iran in recent years by focusing on the country’s information and communication technology firms. We first provide an overview of the structural and institutional context of information technology development in the country. We then turn to a discussion of the current status of the information technology sector, including software and hardware production. In the last section before our concluding remarks we analyze the results of semi-structured interviews carried out with 30 companies in the sector representing various information technology sub-sectors. We generally conclude that despite public sector institutional and financial support as well as the existence of import barriers on the one hand and the recent numerical growth of information technology companies in recent years on the other, the sector remains underdeveloped. In particular, international sanctions against Iran have precluded the establishment of necessary international links while public sector financial support has not been provided in a capability-enhancing environment. Furthermore, the weakness of intellectual property rights has prevented the growth of the software industry whereas inexpensive and illegal foreign software have flooded the market. Also, formal hardware import barriers have resulted in the proliferation of illegal imports. Leveraging Iran’s significant pool of graduates in information and communication technology, we propose a change in the policy environment toward creating a capability-enhancing environment that gives attention to fostering technological and managerial capabilities, efficiency, and quality. Although Iran has a long way before it can export its hardware products, given such an environment, it is possible for Iranian firms to rapidly enhance their presence in the international software market.
)