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At odds with the neoclassical production function, where economic growth depends only upon traditional resources such as capital, labour and technology, which is an exogenous datum, in the cognitive approach we must consider the residual variables of social capabilities and knowledge. These, in fact, represent the key variables to understanding the recent structural changes and competitiveness of an industrial cluster. In this work, the peculiarity of knowledge rests in social capabilities or social abilities to augment the process of the accumulation of knowledge and the broadening of the network. The former depends on the degree of cumulativeness, and appropriability, represented by the capacity of new knowledge to generate further new knowledge and innovation. The greater the degree of appropriability of knowledge, the smaller becomes the capacity for its diffusion in a cluster and its growth. A higher level of knowledge corresponds to a higher degree of innovation. The diffusion of the network depends on the degree of cooperation and on the positive externalities of an industrial cluster. The aim of this research is to analyze the key role that knowledge, social capabilities and innovations play in the transfer and diffusion of tacit knowledge in an industrial cluster and how this creates new knowledge and innovation, thus improving productivity. In the theoretical part, the discussion centres on the different typologies of knowledge, its creation and diffusion in firms' networks, on the nature and definition of social capabilities in the industrial cluster and on the relationship between these and innovation. The focus is also centred on how it is possible to measure the social capabilities within a district. The empirical aspect remains based upon the results of surveys conducted on a sample of entrepreneurs specializing in ceremonial clothing in the province of Bari, the regional capital of the Apulia region in southern Italy. The analysis, measuring social capabilities, requires data collection using a face to face questionnaire designed to obtain information which permits the development of qualitative and quantitative indicators [ABSTRACT FROM AUTHOR]