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This study contributes to the research on the governance of R&D systems by analysing how the biotechnology research groups of Estonian public research organisations have adapted to the conflicting expectations driving Estonian R&D policies: the entrepreneurial university rhetoric and initiatives emerging in the early 2000s versus the excellence-oriented competitive funding system developed since the early 1990s. We find that the policy rhetoric of the entrepreneurial university seems to run ahead of necessary supply and demand conditions. In this context, the strategic behaviour of research groups is driven not by the policy rhetoric of the entrepreneurial university, but by the personal qualities and interests of group leaders and incentives and routines created by the longer-term development of the overall research funding system. Instead of a growing emphasis on applied research and commercialisation, research groups seem to increasingly focus on basic research-oriented activities.
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