Research on university–business interactions has thrived in recent years, influenced by some very successful examples where they have led to the emergence of world-class clusters. However, this paper will

argue that in less developed regions the most important contribution that universities can make to their regional economies is the supply of skilled human capital. Through the case study of the wine industry in Portugal, it will argue that this supply of human capital can have a significant impact on the absorptive capacity of firms, particularly SMEs. It will therefore seek to make an important contribution to academic research in this area, by outlining a relatively neglected research area. It is also relevant for policy-makers and practitioners, as it argues that innovation and regional development policies should pay more attention to the need to match skills provision by higher education institutions to business needs among SMEs.