A critical and often overlooked component of the use and transfer of research in the health care system is the local health and social service delivery agency. There is also very little understanding of the extent to which local community-based agencies conduct research internally to improve their operational capacity. More than ever, these local service organizations require research to guide activity in a rapidly changing health care environment which is characterized by diminishing health and social service budgets, de-institutionalization and concomitant increases and metamorphoses in service demands. This study interviewed 25 executive directors and held a focus group with a group of other directors to examine the use and transfer of research in these organizations. A number of central issues were identified by the directors that affect the contribution of research to the delivery of their programs and services. A conceptual model for developing 'locally-based research transfer' was subsequently outlined that could serve as the basis for enhanced research use and research transfer in other local area contexts.