This thesis addresses the issue of cluster dynamics. The theoretical basis is the Porter’s diamond model of industrial clusters and the analysis pursued in the thesis considers the impact of foreign ownership on Porter’s determinants of successful cluster: factor conditions, demand conditions, supported industries and, finally, firms’ strategies and structures. According to Porter, sustainability of clusters is a function of its dynamics and propensity to change, which in turn depends on these four components of the national home base. The analysis is based on a comprehensive set of case studies conducted for the life science industrial cluster located in the Stockholm-Uppsala area. The results indicate that foreign ownership has positive effect on the dynamism of the cluster.