Satellite university campuses -- whereby established universities decentralise part of their activities, often to areas previously lacking a university -- contribute to the diversification of university systems. While satellite campuses, due to their small scale and limited resources, might perform some activities less efficiently than their larger parent universities, we argue that they are uniquely placed to serve the needs of their localities. Based on the case of a satellite campus in North-West Italy, we show that: (i) the campus' main contribution lies in widening access to higher education to residents who would not attend university in the absence of local provision; (ii) the campus contributes to local development also through research and business and community engagement, and by stimulating local demand for knowledge-intensive services; (iii) research and engagement are more effective for local development where local firms possess relevant absorptive capacity and where there is a favourable institutional framework.