This article outlines and reviews the trends in research on the biotechnology industry over the last 20 years, drawing a distinction between theories that emphasise knowledge processes and those that focus on spatial processes. It covers research in strategic management, innovation studies, political economy, new economic geography, cluster theory, regional studies and economic geography. In reviewing these two strands of literature, it develops a synthesis of the two perspectives called the knowledge‐space dynamic, which seeks to combine insights from both to better explain and situate biotechnology innovation.