Abstract: 

This study is concerned with co-operation between firms in an industrial cluster.  It investigates cooperation between different players in a cluster and how it effects the competitiveness in a region dominated by SME’s.  Small and medium enterprises (SME’s) face many hardships under the dynamic and competitive challenges posed by globalization. In order for the SME’s to survive, they need to reform and one of the way is to linking together and form a cluster.  But, clustering has its own limitation which is based on collaboration and cooperation between firms.This study employed mixed method concept, by combining qualitative and quantitative methods.  Data were obtained by two mediums: (a) Quantitative data collection through questionnaires, (b) qualitative data by conducting face-to-face interview with principals in eight manufacturing firms, and with representatives of supporting institution. The data- collection was analyzed using Porter’s Diamond model. The results indicated that that the ceramic cluster is not competitive which can be attributed to the lack of cooperation between different actors of the cluster.The main recommendation of this study is changing attitudes of entrepreneurs towards the understandings of the importance of clusters and encouraging positive cooperation between them.   

Keywords:  SME, cluster, cooperation, competitiveness