VAN EGERAAT C. and BREATHNACH P. The drivers of transnational subsidiary evolution: the upgrading of process R&D in the Irish pharmaceutical industry, Regional Studies. This paper contributes to the theory of subsidiary evolution in large corporations through an examination of the driving forces behind upgrading of process research and development (R&D) activities in the Irish pharmaceutical industry. Drawing on a survey of pharmaceutical plants and interviews with transnational pharmaceutical plants, it is shown that vigorous growth is occurring in the incidence of process R&D. The paper supports the utility of a multilevel systems perspective on subsidiary evolution. The external environment, internal environment and subsidiary drivers are seen to drive upgrading in a systemic way. The primary drivers for the subsidiaries' enhanced role are located in the global external environment.