In the past two decades, many industrial districts have become more specialized in particular stages of production. Two related processes contribute to this specialization: globalization and fragmentation of production. Hence, this article asks the following question: Can an industry centered on one part of the production cycle become sustainable? This article examines an innovation-based cluster: the life sciences industry in Israel. This industry is based on innovative companies, with strong ties to university research. A majority of companies in Israel are small and focus on R&D. Following a series of in-depth interviews, site visits, and a survey, this article strengthens the perception that innovation can be the basis of an industry, but it may not be sufficient for sustainability. To achieve further development and regional growth, companies require additional factors in the form of other companies at different stages of production, which are supported by policy, funding, and expertise.
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