International competitiveness and economic progress are, among other factors, driven by the process of continuous innovation. Innovation valued by the marketplace is recognized, today, as a creator and sustainer of enterprises. Among the many challenges enterprises face, none seem to be as crucial as the need to change and grow. However, many SMEs seem to fail to innovate in time. They often lack the necessary resources to invest in strategic development operations. This paper draws from the findings of an empirical firm-level study being carried out in Southeastern Nigeria involving two footwear clusters and about 600 entrepreneurs. The paper investigates the general business characteristics and innovation activities of the clusters. The assessment of the two clusters is with a view to addressing specific strategic policy issues designed to sustain the clusters and raise their innovative capability for global competition.