This chapter examines how localization in clusters enhances firms’ resilience to external shocks, focusing on resilience as a firm-level capability. Using the Global Value Chain (GVC) disruptions caused by the COVID-19 pandemic as a case study, we analyze the responses of small and medium-sized enterprises (SMEs) in a Spanish textile cluster. Through a multiple-case, we explore the resources, capabilities, strategies, and cluster conditions that shaped firms’ resilience. Our findings reveal that the cluster’s unique characteristics, especially institutional and local collective actors, enhanced SMEs’ resources and organizational processes, fostering their resilience and enabling an effective response to the pandemic. This response involved reorganizing to produce sanitary textiles, which led to performance improvements and a shift in mentality towards prioritizing investments, collaboration, and innovation. This chapter presents a resilience model that promotes SMEs’ competitiveness within a cluster context.