Abstarct: In this study, analysis the factors affecting the industry's innovation by system dynamic method. The time span of the study period 1390-1380 for firm with 50 members and more in Iran. According to most studies in this area are the main factors affecting innovation can be entixtled to intellectual property protection, human capital, openness and value-added outlined. Most existing literature and history indicates that by strengthening each of these innovations will increase. In this study, we factor in the industry's 50 staff members and more using dynamic system examined to determine their impact on innovation in the sector and evaluated this factor changes in future of innovation. For this purpose, first with regard to the existing studies and determine how the connection between these elements of causal relation to each of factors separately, and went on general causal lixnk was formed. Then, to determine the mathematical relationships between variables and functions were formed. After determining the relationship and entered a small amount each variable in the model was simulated. In order to validate the model tests of behavior reference point was that the test results were also approved model. The next step was to test the hypothesis that all assumptions mentioned in this study were approved. The model predictions for the next period, re-simulation model using scenarios for the year 1400 again showed the simulation results with the increase in Iranian intellectual property rights protection, and more innovation in the industry's 50 employees also increased.