This paper examines the early years of the Friesian Dairy School and is a case study of how knowledge institutes were integrated into a regional economic system. The dairy school was the result of cooperation between people and organisations from the economic and political sectors, which inspired the emergence of a cluster of economic dairy activities. It had a difficult start because it was not clear whether higher education was a matter of private or public interest. In the discussions about the funding and direction of the school, we can observe how patterns of cooperation between the economic sector and the state were shaped, and how this resulted in the creation of knowledge institutes at the end of the nineteenth century and at the beginning of the twentieth century.