This document discusses multidimensional networks and the changing nature of inter-firm collaboration. It analyzes how cluster research has shifted from analyzing agglomeration forces to examining knowledge exchange within clusters. Specifically, it examines how interfirm alliances and networks are an important form of innovative activity. The document also presents a case study on the automobile and machinery sector in Austria that maps the network of interactions between firms and research institutions. It finds that networks are dominated by knowledge-intensive relations and knowledge diffusion is selective depending on firm capabilities. Clusters can act as institutions that generate and diffuse knowledge, leading to higher competitiveness, but there are no automatic agglomeration effects.