The European Union has the aim of becoming the world's most competitive and knowledge-based economy, which entails investments in industry agglomeration. However, these investments have had limited impact. This conceptual paper problematizes the new economic geography terminology used in policy and, more specifically, the way that the key concepts of "industry agglomeration," "social capital," "knowledge," and "innovation" are conceptualized. By adding the perspective of the industrial network or industrial marketing and purchasing (IMP) approach, this paper contributes to a more nuanced understanding of how to facilitate innovation within regional policy. Since the IMP approach offers an organizational-level perspective, including such a perspective will help make the EU's policies more practically applicable. We propose that regional policy should pay more attention to the socio-material resource interaction between the actors involved in the cluster initiatives. This would shift the focus away from creating spillover effects of knowledge towards viewing knowledge as a performative construct that is inseparable from the specific resource interaction in which it is embedded. Also, the definition of innovation within policy could benefit from being reconceptualized as the processual use within producer-user relationships.