<![CDATA[The competitiveness of traditional footwear industry clusters has declined due to increasing market competition, technological change, and limited organizational capabilities among small and medium enterprises (SMEs). Despite various development initiatives, the Cibaduyut Footwear Industry Cluster continues to face challenges in sustaining its competitiveness. This study aims to diagnose the competitiveness gaps affecting footwear SMEs using a capability-based approach. A qualitative embedded single-case study was conducted involving 20 purposively selected informants representing SMEs, government, industry associations, academia, and supporting institutions. Data were collected through interviews, focus group discussions, observations, and document analysis, and analyzed using thematic analysis with open coding, axial coding, and triangulation. The findings reveal high capability gaps in production, technology, management, and marketing, together with moderate-to-high gaps in innovation and stakeholder collaboration. These deficiencies lead to inconsistent product quality, weak market positioning, limited innovation, and low adaptability to market changes. The study concludes that competitiveness decline is a systemic capability problem rather than an isolated operational issue. It contributes to the competitiveness literature by proposing a capability-based diagnostic framework that integrates organizational capabilities and cluster ecosystem factors to support more effective competitiveness improvement strategies.]]>
