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The aim of this paper is to outline the importance of tacit knowledge in the innovation process and to highlight the way that geographical location not only in uences the relationship between knowledge and innovative activity, but also affects the way that such interaction in uences the geography of innovation and economic activity. After a discussion about the nature of knowledge, the paper explores the relationship that exists between knowledge and geography. The paper then reviews, using as an analytical lens, the growing body of literature on knowledge spillovers which af rm the importance of geography. However, the discussion then seeks to outline some crucial gaps that remain in our conceptualisation of the knowledge spillover and transfer process. The paper then highlights the neglected role of knowledge demand and consumption in a spatial context, before concluding with a review of areas for future research.

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Outsourcing of research and development (R&D) activities has become a major management issue for R&D and technical managers within firms. It has also been of growing concern to academics who are trying to chart the implications of the increasingly distributed nature of research and innovative activities in advanced economies. This study is based on a survey of research-based pharmaceutical companies operating in the United Kingdom conducted in [2004][2005][2006]. The aim of this paper is to outline the main reasons for pharmaceutical firms to outsource R&D and the management practices followed by such companies in relation to outsourcing. The research results provide interesting findings in relation to, for example, the reasons behind outsourcing, the decision-making processes behind such practices and barriers to outsourcing arrangements. These issues are evaluated together with the characteristics of the firms and the specific project outsourced. The distinctive nature of R&D outsourcingAlthough there are a number of generic issues and strategies that firms need to be aware of in R&D Management 38, 2,