Contemporary interventions in historical Mahalleh and the design of new settlements in Iran rely on Western micro-urbanism patterns such as urban villages and new urbanism. Although the urban lifestyle in Iran affects the Mahalleh identity, this context-oriented pattern is more appropriate than the Western ones with all weaknesses and critiques; namely, social engineering and physical determinism. This paper aims to present a paradigm model for the Iranian micro-urbanism (Mahalleh), applying grounded theory methodology. The literature of micro-urbanism is discussed first, followed by exploring the categories of Mahalleh and integrating them around the core category in a paradigm model. Influenced by specific conditions: “collectivism” and “ecological balance” as causal conditions; “social identity” as an intervening condition; “physical and functional organization” as contextual conditions, “familiarity” emerges as a core category in the proposed model. Furthermore, residents of the Mahalleh have special interactions contributing to the “social capital,” “changeability,” and “parental effect.” Finally, “Mahalleh as the home of the families” is a consequence of the actions and interactions done under such conditions.
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