Many accounts of firm behavior in geography today suffer from a simplified theory of the firm. Many theories treat the firm as a unified entity with one overarching strategy. These theories have difficulty explaining how firms construct strategy around issues such as location, partnering, and outsourcing and how they make decisions about different corporate activities (research, development, manufacturing, and marketing). I argue that firms in emerging industries behave in a much more complex fashion than is usually theorized. Understanding firm decisions on structure, behavior and location depends on the recognition that firm strategy differs for each corporate activity. I argue that one way around the limitations of the conventional approach is to break down the firm into development, production, and realization processes and understand the requirements and opportunities for each separate activity. By following innovative products in the US drug industry (pharmaceuticals and biotechnology), I develop a micro-level, activity-specific, theory of the firm.