Regional hierarchies and the location of hi-tech MNEs: the case of the pharmaceutical industry in the UK

Globalization, far from eliminating the relevance of geography, brings to the surface the importance of location as a collector and repository of specialized knowledge. In this “new age of capitalism”, regions are emerging as important catalysts for innovation and production development. This paper investigates the location patterns of R&D-intensive MNEs at the geographical micro-level. Analysis refers to the pharmaceutical industry, as one of the most active industries in FDI in R&D, and their foreign activities established in British regions. In this route, the present study develops a hierarchy of UK regions both on a technological and skills basis but also on a broader basis covering the overall macroeconomic environment. Results point towards a combination of corporate location strategies. High-technology firms are more likely to operate abroad in technology specialised large regions in accordance with regional hierarchical ordering. This pattern is consistent with MNEs’ commitment to access and tap into the specific technological assets embedded in the local knowledge systems and at the same time exploit their corporate-specific advantages in large markets.