This paper investigates innovative activities, clustering and regional interaction of a group of Information and Communication Technology (ICT) firms in the metropolitan area of Melbourne. In order to make an evaluation of the regional innovation potential among the firms, a written questionnaire was sent to the selected firms. The focal point of the analysis lay in determining innovative activities within individual firms and degree of linkages between different firms. The results indicate that innovative relationships with customers and suppliers are stronger within the region and they tend to co‐operate more on a vertical basis. However, the findings suggest that firms rely only partly on innovation partners within the region and to a considerable extent they are integrated in national and international networks.