Reorganizing value chains through foreign direct investment: Austria's pharmaceutical industry international expansion

This article analyses the international expansion of the pharmaceutical industry in Austria. The pharmaceutical industry is a knowledge-based industry dominated by large global oligopolies, which also includes many small companies focused on specific market areas. The article examines the extent to which different stages of the value chain are affected by foreign direct investment and impact the organization and governance of the value chain specified by the type of firm. We argue that corporate motives to invest abroad are very specific to firm's market power and position in the value chain of the industry. On the one hand, a few foreign owned pharmaceutical companies that operate production facilities as well as research and development are the key investors. On the other hand, Austrian firms expand internationally through foreign direct investment mainly destined for developing foreign markets.