Integrated graphical framework accounting for the nature and the speed of the learning process: an application to MNEs strategies of internationalisation of production and R&D investment

Existing illustrations of the learning phenomenon either stress the relationship between flows and stocks, neglecting the chronological time variable, or the speed of knowledge accumulation along time, neglecting the nature of the underlying learning process. In this paper we present a graphical depiction stressing, in an explicit way, both the nature of interplay between flows and stocks and the intensity of the learning process. The four-quadrant graphs that we develop overcome considerable simplification in literature by deriving, by construction, a measure of dynamic gains of knowledge following the interplay of stock of scientific and technological knowledge and the flow of effort in R&D. This scheme is then applied to study the internationalisation of production and R&D, which are strategies followed by multinational firms. Two types of innovation – process innovation and product innovation – are therefore studied constructing, in each case, an industry performance measure adequately indexed to the cumulated knowledge stock at a given moment in time. In any case, the dynamic efficiency measure adopted naturally takes into account both the absolute changes in the technology indexes and the time delays to reach them, which are properly discounted. Regarding multinationals strategies - internationalisation of production and R&D investment -, we begin with the question of finding a new location for using a now well developed production technology, and then deal with the problem of selecting a region of excellence in research to take gains of concentration advantages and local externalities.