The paper is a study on how the development and innovation in the business life in a region are affected by universities and higher education institutions. There is focus on the interplay between firms in the Region of Zealand and higher education institutions in as well as outside the region. The study is investigating the correlation between the candidate production and the knowledge development in firms on a micro-level. The paper is an empirical investigation of the knowledge dynamics in selected firms, where types of knowledge due to innovation and development are identified. The investigation is focusing on what role the highly trained employees have on the knowledge development in the firms. Part of the knowledge dynamics in the firms is the network and another part is the process of which knowledge is developed.  The empirical analysis explores what role the highly trained employees have concerning networking and what role they have in the developing process of new knowledge. The empirical investigation is based on a range of qualitative semi-structured informant interviews together with participating observations in selected firms. The paper also looks at proximity versus distance in relations that lead to knowledge development. How important are short distance relations and how important are long distance relations? How does it affect the anchoring of the knowledge? It is addressing the question about companies’ location in the region. What does the local context mean for the knowledge generation and use in the firm? To explore this further the empirical investigation has selected firms that are located in the remote areas of the Region of Zealand. The study especially explores the role of the highly trained candidates in firms’ knowledge dynamics, to contribute further to the discussion about the knowledge economy.