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The Anglo-German Foundation for the Study of Industrial Society, established by an agreement between the British and German governments in 1973, aims to contribute to the knowledge and understanding of industrial society in the two countries and to promote contacts between them. Based on a detailed investigation of the links between high-level skills formation, knowledge transfer activities and industrial performance in the electronic industries in Britain and Germany, this report attempts to answer the following questions: (1) Why has Germany fared less well in high-tech industries than in traditional manufacturing industries? (2) Why is the opposite true for British industry? Findings suggest that knowledge transfer between the academic science base and industry in fast-moving high-tech industries in both countries is best promoted by direct government support for partnerships between companies, universities and socialist research organisations. The chapters are: Introduction; Sample selection and methodology; High quality labour markets and knowledge transfer; Technical problem-solving and knowledge transfer; Foreign-owned enterprises, knowledge transfer and industrial performance; Knowledge transfer between enterprises, universities and research institutes; Summary and assessment.