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Research on processes of innovation has emphasised the role of (publicly funded) research institutions (RTOs) as well as the embeddedness of innovation procedures in a systemic context. This paper deals with the changing contribution of RTOs to innovation systems due to the emergence of a highly differentiated service economy. It is part of a larger research project on the role of publicly and privately provided service functions in innovation. Changes in RTOs are analysed along two dimensions: the private / public dichotomy, and a knowledge generation / knowledge application trajectory. It is argued that the role of RTOs in national innovation systems can best be understood by complementing organisational and institutional approaches by a functional perspective. Innovation service functions are provided by RTOs and by other service suppliers, and they go beyond the traditional scope of RTOs as producers of R&D results. The flexibility of RTOs to adjust to the requirements of innovating firms will determine their chances to compete in newly emerging innovation services markets.
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