There is a growing literature on the main determinants of the competitiveness of small and medium enterprises. One important contribution in this way is the assumption that the clustering of firms can promote strong benefits for these firms, also in terms of the productive improvement. Based on these assumptions, this paper aims to exam the main effects of the clustering firms for the manufacturing process upgrading of the small firms, by the analysis of the diffusion manufacturing practices and tools in local systems. To do that, it was done a survey with 42 small footwear producers at the local system of the city of Franca, Brazil. The study has investigated the existence of manufacturing process improvement among these firms and the main sources of information for the diffusion of these tools. The main results show tat the clustering firms can stimulate the adoption of new manufacturing management practices, trough both deliberated channels of diffusion of new knowledge among firms and by the spontaneous ways of information exchange, that are usual in these local production systems. In addition, it was seem that the level of appropriability of these benefits depends on the existence of previous knowledge inside firms, which means, its absorptive capacity.