Objective: This study aims to identify and prioritize the key factors influencing innovation strategy in the livestock and dairy industry, with a focus on knowledge-based firms, in order to address the gap between the importance.

Method: The research is applied in purpose and descriptive–analytical in nature. Innovation-related factors were identified through a Rapid Review and expert interviews. Data were collected using a questionnaire based on a five-point Likert scale and analyzed using the Importance–Performance Analysis (IPA) model.

Findings: The results indicate that all identified factors exhibit a negative gap between importance and performance. Factors such as inter-firm collaboration and innovation ecosystem, strategic alignment, innovative organizational culture, human capabilities, agile organizational structure, and incentive mechanisms were positioned in the first quadrant of the IPA matrix, indicating a critical need for improvement. Managerial support, financial resources, and institutional frameworks showed relatively acceptable performance.

Conclusion: The findings suggest that the livestock industry in Iran is still at an early stage of innovation maturity. Focusing on critical innovation factors can significantly enhance innovation capacity and competitiveness in knowledge-based firms within this industry.