This book illustrates the distinct nature of innovation in medium technology industrial sectors, which are the key to European international competitiveness, and the recent changes of networks within regional clusters. It presents best-practice management and regional strategies, and an original and coherent theoretical framework for the analysis of innovation processes called 'Territorial Knowledge Management'. The authors concentrate on the territorial dimension and the cognitive economics approach, and go beyond the traditional focus on R&D in high tech sectors. They also highlight the key role of intermediate institutions in the governance of modern co-ordinated market economies.