This research deals with Taiwan's cycle industry investigating the transition from a pure manufacturing base towards an innovation cluster. The role of cycling as sport and recreational activity in this transition process is analysed. The sport cluster model is used as theoretical framework aiming at refining the model and at better understanding the evolution of sport-based industries (Gerke, Desbordes, & Dickson, 2015). Results are discussed with regards to contemporary literature on the transition process of Taiwan's SME-based economy from traditional industries towards innovative niche industries (Utterback, 1987; Wong, Hu, & Shiu, 2015)