This article addresses how European policy initiatives in higher education, research and innovation are diffused in the European higher education research and education area. Based on an instrumental and an institutional perspective, specific expectations are developed as to how policy diffusion might unfold, and, through an in-depth analysis of the strategic plans of 19 higher education institutions in Latvia and Norway, the article identifies factors that potentially mediate European policies into the strategic agenda of universities and colleges. The findings show that European Union membership and policy area seems to matter for the attention given to European policy initiatives, while administrative capacity at institutional level have less or quite mixed effects. The article concludes that both instrumental and institutional perspectives are of value in explaining how European policy diffusion takes place.