Regional clusters, the geographical bounded concentration of firms are the best environment for stimulating innovation and competitiveness of firms. This paper therefore underscores the limit or inhibiting factors of industrial cluster in geographical innovation, using the Lagos region as a case study. Primary data were collected through the administration of one hundred and three questionnaires, in the twelve industrial estates (total sampling). The paper has reveals tremendous cluster benefits in form of Transportation economies, Power economies, Raw material purchase/supply, Collaboration in research and development, labour economies, security, telecommunication economies, joint ports and Shipping as well as access to financial institution economies. Apparently, cluster can lead to unlimited and amazing technological development of a region, thereby facilitating diffusion and innovation creation. Despite the astounding advantages emanating from cluster development, the research has found out that its performance in economic development could be limited, hindered or inhibited. The paper further revealed, inadequate water supply and transportation, incessant power supply, research and development inadequacy, security, personal reasons, sales promotion, inaccessible financial institution as well as government policy as inhibiting factors which limit the role of clustering in facilitating crucial geographical innovation.
It is therefore recommended that industrial cluster should be strengthened and encouraged through government investment in the industrial sector, making the location factors to be liberal, ensuring the adequacy of facilities in the industrial estates, giving tax holiday to younger investors, relaxing the laws governing the importation of some raw materials. This will have positive impact on productions and industrial expansion.