As a new wave of technology revolution and industry transformation accelerates, “context” has emerged at the national strategic level as a critical linkage between technology innovation and market demand. Existing research has primarily adopted the dual framework of “demand pull-technology push”, with limited attention paid to the theoretical mechanisms from the perspective of institutional construction. This study introduces a new theoretical construct of the “institutional market”, and conceptualizes the context as a series of institutional arrangements jointly established by government and market in a specific domain. Through the integrated design of directed science & technology policies, demand cultivation policies, and industry development regulations, the institutional market promotes the deep-integration of policy chain, innovation chain, and industry chain. Thereby generating a distinctive “contextual force” which differs from the forces of technology-push and demand-pull. Based on this framework, the study draws on three industrial cases—integrated circuit, electric vehicle, and high-speed railway—to analyze the construction pathway comparatively of institutional market under the industry development mode: catching up, leapfrogging, and leading. From an institutional perspective, this study promotes a new theoretical framework for explaining context-driven innovation and reveals the essential nature of context. And the research enriches innovation theory, and provides theoretical guidance for the transformation of government toward an enabling role. It also offers policy implications for the construction of high-level innovation contexts.