Purpose-The purpose of the paper is to explore why the entrepreneurial activities are agglomerative in a cluster and to investigate the government agencies' functions in the industry cluster that can construct favourable environment for entrepreneurial development. Design/methodology/approach-The case study method is chosen to collect in-depth data to investigate the research domain, and the detailed case of the industrial cluster in Wenzhou, China is selected. The empirical data for the analysis are derived from in-depth interviews with entrepreneurs in private and public organizations. Statistical data and historical documents are also collected to increase the understanding of the regional conditions, as well as for comparison with and triangulation of the research theme. Findings-It was found that in Wenzhou, four major groups of government agencies which perform the functions of investment, research & innovation, industrial information and supporting service, were generated along with the development of the industrial clusters; and it was found that initial capital, technology support and human capital are the critical resources those institutes had tried to provide to facilitate the entrepreneurial activities in the local clusters. Originality/value-The paper enriches our understanding about how entrepreneurship is promoted and cultivated in industrial clusters under the social-economic environment in China and sheds light on the Chinese entrepreneurial process in the local industrial clusters.

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