Objective: This study aimed to identify the causes and consequences of the “Innovation Theater” phenomenon in Iranian public sector organizations.

Method: The study is applied in purpose and qualitative in nature, designed within the interpretive-constructivist paradigm. The statistical population consisted of three groups: university professors, key experts and informants, and organizational managers and policymakers in Ilam Province. Using purposive and snowball sampling, 18 participants were selected until theoretical saturation was reached. Data were collected through semi-structured interviews and analyzed using thematic analysis based on Braun and Clarke’s six-step process. Validity and reliability were ensured using Lincoln and Guba’s criteria.

Findings: Data analysis led to the identification of four overarching themes for the causes of Innovation Theater: hard drivers (performance pressure, resource constraints, structural complexity), soft drivers (institutional norms, goal ambiguity, organizational culture), legitimacy drivers (need for external legitimacy, evaluation and accountability pressures), and individual, unit, and environmental drivers. Additionally, four overarching themes were identified for the consequences: structural and functional consequences (resource waste, obstruction of substantive innovation, inefficiency in solving public problems), legitimacy and reputational consequences (reduced organizational legitimacy, internal identity and legitimacy crisis), individual and psychological consequences (employee burnout and demotivation, reduced psychological safety and risk-taking), and cultural and interpersonal consequences (weakened innovation culture, conflicts and corrosive organizational atmosphere).

Conclusion: Innovation Theater in Iranian public sector organizations is not an individual deviation or managerial error, but a rational response to paradoxical institutional environments in which the display of innovation becomes an adaptive strategy for survival and legitimacy. This phenomenon is the product of the complex interaction of hard, soft, legitimacy, and individual/unit/environmental drivers, leading to a vicious cycle in which the display of innovation undermines the organization’s real capacity and reinforces the need for further display.