The national innovation system (NIS) is an evolving and closely embedded system involving private and public fi rms, universities, and government agencies to develop, diffuse, and exploit knowledge within a national context (Carlsson, 2006; Lundvall, 2003). Sweden and Germany have each created successful innovation systems; the Fraunhofer model in Germany involves 60 research institutes linked to a network of universities. The Fraunhofer system receives some 30% of funding from the state and 70% from industry and government contracts. Sweden is recognized as one of the top European Union (EU) countries in innovation. The Swedish RISE Holding AB is a holding company owned by the state and consists of umbrella research institutes that are externally funded.