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Universities are widely regarded as central institutions in the contemporaryknowledge economy,and their relationships with other organisations involved in theproduction of knowledge have been a matter of study,and controversy,over the lastfew decades.This paper briefly reviews this debate,and goes on to report on recentresearch examining the nature of these interactions in a sample of Europeanuniversities.It proposes that the university’S role in knowledge production may betheorised in terms of knowledge aggregation and knowledge manipulation;and thataspects of university organisation may be designed in order to maximise theeffectiveness of both processes.