Currently with the rise of knowledge cities concept, growth and development of the cities lies in acquisition of explicit and tacit knowledge; therefore, cities make all of their effort to improve their knowledge base development and also compete with other cities to attract and retain creative and talented people. Among the mechanisms available for cities dynamics based on knowledge creation and innovation, the mechanism of industrial cluster especially knowledge-base- clusters as an innovative environment take a lot of interests in the developed countries. Researches in developing countries show the increasing trend toward the use of this mechanism in these countries with the purpose of reaching the knowledge city status. The current research aims at investigating the key competitive factors of furniture cluster in the city of Mashhad (2nd city of Iran in terms of population) according to Porter’s Diamond Model stimulating the establishment of Mashhad knowledge city. For reaching above purposes, both qualitative and quantitative approaches were used. Eight interviews were conducted with experts in this field and also 35 questionnaires were returned. Results show that the current status of this cluster is weak and key competitive factors in this cluster are not available. Although the demand condition and rivalry in this cluster is fine, however, the status of supporting industries and also the government supporting policies are weak. Also there is a lack of advanced and specialized factors and bilateral and multilateral cooperation among the university, industry and government to create a base for knowledge based development.

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