This article examines the challenges faced by a Portuguese technical university that is striving to develop its research base within a developing science, technology and higher education system. The paper identifies lack of resources, and also organizational factors, as particular challenges. These include faculty inbreeding, career structures and related incentives as hampering factors preventing a faster development of the university research base. These factors are strongly affected by the development of the science, technology and higher education system. It is argued that these challenges can be tackled, but greater institutional autonomy is necessary as well as an increased participation of research and development in university governing bodies. It is also recognized that the different strategies for dealing with the challenges facing universities should take into account the knowledge base of the development of schools. (Contains 2 tables, 2 figures, and 10 notes.)