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The main purpose of this paper is to investigate the effect of market structure on innovation and R&D in Iran’s manufacturing sector. To do this, first, statistical data for Iran’s manufacturing sector has been gathered in International Standard Industrial Classification (ISIC) format, then mutual effects of concentration, innovation and R&D, advertising and profitability in different industrial activities have been analyzed using simultaneous equations system and Error Component Tow Stage Least Squares (EC2SLS) during 1996-2007. The results show that industrial concentration has a significant and inverted U-shaped relationship with innovation and R&D. In addition, R&D expenditure declines with increases in profitability. The investigation of the factors affecting manufacturing structure indicates that although innovation and R&D has no effect on manufacturing structure, but profitability and performance of top firms affect their concentration. Our findings exhibit the ineffectiveness of concentration and innovational behavior on industries performance; whereas increasing market concentration results in advertising expenses and innovational behavior of firms raises advertising expenses. Similarly, the lagged and accumulated effects of R&D confirm the existence of an inverted U-shaped relationship between concentration and R&D

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One of the most important concepts for all enterprises in every size and every sector is market performance. As the market success of the firm is a consequence of its market performance, it will be pertinent to state that performance is a direct determinant on the consequence. Today, dynamic capabilities have been identified as one of the vital necessities for the performance of organizations in turbulent environments. Given the critical role of market performance in turbulent competitive environments, this concept has attracted attention of many researchers of management science in recent years. So how to achieve this important consult for organizations is vital, and very little research has been done in this regard. Therefore, in this research, the model of improving market performance based on dynamic capabilities (IT competencies, entrepreneurial and market orientation and operational agility) is presented and tested in the electronics industry of Iran. This model is based on four management areas: strategic management literature related to dynamic capabilities, marketing literature, entrepreneurship, and information technology .The results confirm the research model. It can be concluded that the dynamic capabilities of the organization will help to improve market performance.