This paper aims to enrich the analysis on the significance of the individual firm resources in a cluster and the effects of diverse cluster relationships, including local and non-local ones, on firms' innovation capacity. On questioning the commonly accepted direct and positive impact, we explore the joint and non-linear effects of internal resources and inter-organisational relationships on innovation. Data from 251 footwear manufacturers located in the Spanish Vinalopó cluster were used to explore the proposed causal relationships. According to findings, the impact of each factor on product innovation is not homogeneous. Internal innovation efforts and cooperation with local suppliers positively affect the creation of new products, while collaboration with local customers and extra-cluster linkages presents an inverted U-shaped relationship with product innovation. Finally, a number of implications may be drawn for policy makers, practitioners, and future research.