A nation's competitive advantage is often characterized on a specific industry in which firms are inclined to clustering together. This industrial clustering phenomenon is likely to accelerate industry development and economic growth. However, little has been done in the literature regarding how the industrial clustering affects firms' behavior and their organizational performance. Accordingly, the purpose of this study is to explore the relationships among industrial cluster, firm's behavior, and organizational performance. Ecological and network theories were used to explain the relationships. The results of this study suggest that industrial cluster has a positive effect on firm's behavior; that firm's interaction and knowledge flow have a positive relationship with the institutional phenomenon; that firms' interaction and knowledge flow play a positive role in affecting the organizational performance. Conclusions and suggestions were made for business practitioners and academic researchers.