Innovation is a critical component for long term success of an organization. However, being innovative is rarely easy. Successful implementation of any innovation (product, process, or business system) can heavily rely on the functionality of the current innovation system in a given industry. An innovation system is composed of policies, companies, individuals, and other major actors that may play a role in the development and diffusion of an innovation into the marketplace. Historically, the forest products industry has faced numerous challenges in remaining innovative: outside forces provide few incentives or favorable policies while poor communication among industry sectors impedes creative growth from within. An in-depth analysis of why the forest sector innovation system is not performing at a higher level is therefore essential. This thesis outlines results gathered from personal interviews with industry professionals and an industry survey on key policies, incentives, organizations, and the condition of Oregon's forest sector innovation system in general. Ultimately, the research provides recommendations for an improved forest sector innovation system that can, in turn, increase competitiveness and synergies among forest sector companies, higher education, and other businesses in Oregon. / Graduation date: 2013