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This paper investigates how the localization of firms in clusters enhances their resilience in the face of external shocks, using the COVID-19-related disruptions of global value chains (GVCs) as a case study. Our qualitative study of the Alcoi-Ontinyent textile cluster in Spain's Valencian Region shows that the cluster's institutional infrastructure facilitated the reorganization of the cluster's cognitive structure, enabling small and medium-sized enterprises (SMEs) to cope with the shock. Local collective actors aided in leveraging cluster enabling factors to enhance firms' resource position and their reconfiguration, thus supporting firms' dynamic capabilities, and ultimately their resilience. Our study contributes to the literature on clusters and firm resilience by showing that clusters can play a crucial role in SMEs' ability to respond to external shocks and offering insights into how firms can leverage their location in clusters. We also shed light on the importance of institutions, collective actors, and collective actions in creating a competitive advantage for clustered SMEs. [ABSTRACT FROM AUTHOR]