Industrial clusters in the developing economies: insights from the Iranian carpet industry

Industrial clusters are perceived as potential drivers of SMEs development and efficient policy instruments to lead national and regional innovation and growth. However, these clusters in developing economies are typically placed in complex environments that impose a mix of serious challenges which adversely affect their overall performance. Therefore, this study aims to analyze the nature of these challenges and understand their dynamics using a case study of a carpet industry cluster in Iran. Using multiple sources of evidence, the study reveals two distinct, yet interrelated, levels of challenges: micro and macro. Under each level, a number of key dimensions were identified and theoretically linked which helped to conceptualize the structure of these challenges and model their dynamics.