An effective innovation system requires productive interactions between all its parts. Within Australia there is a view that business-university interactions are suboptimal. Government has set a target for doubling the interactions between business and publicly funded researchers by 2020; and the Group of Eight has a strategic priority to build closer links between its member universities and business. Close links require trust, mutual understanding and an ongoing commitment that extends beyond short-term projects and issues. These take time and effort to build but there is already a sound foundation and it is important not to underestimate the strength and diversity of the linkages already in place. The purpose of this paper is to explore these issues in more detail and to provide a framework for an examination of the business-university nexus in other countries in order to identify what lessons Australia might draw from the practice of these countries. This is important because compared to experience elsewhere, it does appear that business in Australia provides less direct and indirect support for universities, for example by funding research or in public debate on the purpose and importance of university education, than does the business sector in other countries. If universities are to fulfil their potential in Australia, it is important to understand why this is and to take action to rectify it. (Contains 30 footnotes.)