This article examines some of the arguments given in the academic literature as to why institutional conditions are so important in the context of implementation of Structural Funds for R&D, and the absorption of Structural Funds by SMEs within a territory, particularly in a less-developed region. The requirements relating to smart specialisation in the 2014-20 Structural Funds regulations have also brought into focus the crucial role of institutional conditions in this context. This article describes the recent experience of Pomorskie Vovoideship in Poland in launching their process of smart specialisation, and some of the challenges the region has faced during this implementation process. Drawing on the experience of Pomorskie Vovoideship, the author proposes some important conditions required for the absorption of Structural Funds for R&D and innovation by SMEs. This process is still ongoing, and the article concludes by examining the remaining requirements for strengthened competencies within the region which could improve outcomes.