Social network theory is not only popular with scholars in the field of sociological research, but also more and more scholars are interested in studying it in other field, such as economics, management, marketing, and information science. It is also normal to find the phenomenon that numerous interdisciplinary research is universal in the same field . From the angle of the combination of sociology and economics, this paper ascends the social network theory，expounds the function of social network theory in the process of industrial clusters’ forming ,developing and upgrading in China . Not only does it save the costs of negotiating , trading and administrating , it reduces the costs of obtaining the information and resources. Besides, it promotes the competition and cooperation among firms in the clusters , and decreases the unhealthy tendencies which includes riding by free , lemon market and so on .In addition ,it promotes firm innovation in the clusters and improves the competitiveness of the entire cluster.
KEYWORDS： social networks , industrial clusters , function
