Considering the process of innovati on development, this paper aimed to examine the eff ect of diff erent dimensions of proximity and the level of coordinati on that exists in a texti le cluster. This study employed a qualitati ve method, based on indepth interviews that were conducted with two leading fi rms in a texti le cluster in Valencia, Spain, which is subject to intense competi ti on from producers in Asia. Firms were selected according to the criteria of innovati on development and opportunity. This is a pilot study that precedes a more ambiti ous one. The results suggested that fi rms' innovati ons are developed in an isolated, disconti nuous, marginal, and uncoordinated way, and clustering has a marginal eff ect. Furthermore, despite high geographical and cogniti ve proximity, low social proximity is maintained by the low level of trust between the fi rms. These fi ndings may be of signifi cant practi cal value for practi ti oners and insti tuti ons. Firms can gain a bett er understanding of the importance of being located in a cluster, as this is a key factor for their survival under intense competi ti on. However, geographical proximity is not suffi cient, and fi rms need to cooperate with each other and share their ideas and experiences. In additi on, insti tuti ons should interact more with companies, speak their language, meet their needs, and devise strong cluster initi ati ves. This study provides a more comprehensive understanding of how insti tuti ons and fi rms interact within a cluster in the process of innovati on development and elaborate upon diff erent dimensions of proximity among fi rms