More than ever, governments in Canada and other leading countries are focused on leveraging public investments in higher education research and development to stimulate innovation, enhance competitiveness and bolster economic growth. To realize these goals, initiatives to strengthen existing knowledge flows between universities and firms must be developed, and policies to encourage new university-industry linkages must be implemented. Because of the iterative and personalized nature of the innovation process, knowledge exchange often occurs on a local basis between firms and institutions located in proximity to each another. Hence it is critical for national and subnational governments to work together to encourage publicly and privately-driven policies, programs and initiatives that support the development of local and regional university-industry linkages, and ultimately reflect an advanced understanding of the significance of geographical proximity for the knowledge transfer process. As such, this paper underscores the value of adopting a localized view of university-industry knowledge flows.