In Ireland, interest in the cluster concept (Porter 1990. 2003) dates back to the 1990s when enterprise policy focused on the development of competitive advantage in clusters of interlinked sectors (Doyle and Fanning 2007, Culliton 1992). Research in the early 1990s, found a weak system of innovation in Ireland and advocated a focus on broad institutional factors and the potential of clusters in the development of a national system of innovation (Mjøset 1992). International cluster policy is increasingly focused on raising levels of innovation as a means of improving competitiveness (Sölvell et al 2003). This thesis builds on Irish research focused on the development of clusters. It reviews the state of development of clusters in two sectors of the Irish economy; the high-technology ICT/ software sector of the modern economy and the dairy sector of the traditional economy. The thesis contributes to the literature on clusters through the application of the 'cluster initiative' concept in an Irish context and places greater emphasis than previous Irish studies on the role of collaboration. Sölvell et al (2003) defined a cluster initiative as an organised effort to increase the competitiveness of a cluster, involving firms, government and/or the research community. A new framework for analyzing collaboration is proposed, bringing together insights from the literature on clusters, institutional economics and the systems of innovation approach. This framework includes a new concept, organisations for collaboration (OFCs) to describe the role of industry associations and other organisations, which represent the views of business. The social capital concept (Field 2008) is used to add depth to the analysis of collaboration within clusters and cluster initiatives.