industry interesting to note how the institute finances these

industry has increased from 5.0% in 1968 to 10.5% in 1995 (ibid: 71), and amongthese the percentage of those coming from a Technische Hochschule has increased aswell. The formal degree of training and education has risen considerably.Both formal and informal ties between the University and Stuttgart firms becamecloser, following the demand for basic research on the firms’ side. The scientificinfrastructure at the University now includes an impressive range of specializedinstitutes with contacts to the local economy.One of these is the Institute of Machine Tools (IfW), which does regular training ofengineers at the University and offers various services like geometric testings onmachine tools, measuring technical analyses of drives and axes of machine tools, andtheir design. In addition to this, the institute carries out research projects. Anotherexample of the local specialization of scientific expertise at university level is theInstitute for Steering Technology for Machine Tools (ISW). It was founded as a chairat the university in 1965, dedicated to finding computer-aided solutions forproblems of automation of machine tools. Today the institute consists of fiveorganizational units, carrying out tasks ranging from central services and steeringtechnology to system integration, design of mechatronic systems and components inrobotics. It is interesting to note how the institute finances these two different fieldsof applied and basic research. Developments in the former are financed by (local)industry, while the basic research projects are supported by public funds. Thus amultiple organizational structure of teaching and research in both fields emerged,allowing a combination between radical and incremental innovation as well as thediffusion of knowledge in both fields.In general we found that these activities of the university were positively evaluatedby firms, though some had been disappointed by the slow speed of completingresearch. One owner commented: ‘If the university cannot solve the problem, I amsure I cannot do it either’ (Interview BW-F-02). Although firms were self-confidentthat their own niche market know-how could not be beaten by university institutes,for more general problems and completely new innovative solutions they showed areceptive attitude to help from these institutes. This gives an insight into how pathdependences might result from the embeddedness of a local economy. If theuniversity is estimated as a high-rank specialized organization which providesviable solutions, entrepreneurs might sometimes follow its proposals even if theinternational market prefers less complex solutions. However, we have no indicationthat the university created a specific lock-in resulting from its specialization as a