This work aims at studying the mechanisms by which firms belonging to traditional low and medium tech sectors absorb radical new technologies. By means of a coevolutionary analysis we highlight how the technological upgrade of a productive system is the result of the interaction among local actors. The case study of the industrial mechanical district of Reggio Emilia is investigated. The district partially evolved in the technological cluster of mechatronics, and led to the constitution of the Faculty of Mechatronics Engineering in the same province. The analysis shows how the university on the one hand has been instituted to answer the local firms' needs, and on the other hand how it influenced the evolution of the technological capabilities of the local productive system. The analysis leads to some important policy implications.