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Based on an institution-based view we propose a series of factors that explain location choice of R&D subsidiaries, exploring the question of why R&D subsidiaries choose one region of a country over another to locate. We propose that the institutional and economic asymmetries that exist across regions within a country are likely to generate differences in innovativeness. These differences will have an impact on international R&D subsidiary location choice. We contribute to IB theory by incorporating a location-specific analysis that contrasts to the usual country-level observation on the determinants of firms’ location decisions and better explain location choices based on the differences within host-country institutional environments.
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