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Divergence in Iranian nursing organization including academic and clinical settings adversely affects knowledge transfer. Centralized and medical focused nursing with a lack of effective representation at senior or national level was inferred as the main causal conditions. Using grounded theory methodology, in-depth individual interviews were conducted with 17 participants to better understand their perceptions of the organizational factors influencing knowledge transfer. Organizational factors affecting knowledge transfer can be grouped into two main categories or themes: (i) the dimensions of incompetent organizational content (such as work culture); and (ii) incompetent organizational structure (such as the hierarchy of authority, the expertise and the standardization). The findings showed that there was a range of competing subcultures between management and nursing. The most important basic social problem was inferred as divergence in nursing organization across academic and clinical settings.