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Buyer-Supplier Networks and Aggregate Volatility

  • Takayuki MizunoEmail author
  • Wataru Souma
  • Tsutomu Watanabe
Chapter
Part of the Advances in Japanese Business and Economics book series (AJBE, volume 4)

Abstract

This chapter investigates the structure and evolution of customer–supplier networks in Japan using a unique dataset that contains information on customer and supplier linkages for over 500,000 incorporated non-financial firms for the 5 years from 2008 to 2012. We find, first, that the number of customer links is unequal across firms: the customer link distribution has a power-law tail with an exponent of unity (i.e., it follows Zipf’s law). We interpret this as implying that competition among firms to acquire new customers yields winners that attract a large number of customers, as well as losers that end up with fewer customers. We also show that the shortest path length for any pair of firms is, on average, 4.3 links. Second, we find that link switching is relatively rare. Our estimates indicate that 92 % of customer links and 93 % of supplier links survive each year. Third and finally, we find that firm growth rates tend to be more highly correlated the closer two firms are to each other in a customer–supplier network (i.e., the smaller is the shortest path length for the two firms). This suggests that a non-negligible portion of firm growth fluctuations stem from the propagation of microeconomic shocks—shocks that affect a specific firm—through the customer–supplier chains.

Keywords

Buyer-supplier network Aggregate volatility Input–output analysis Power-law distribution PageRank 

Notes

Acknowledgments

We would like to thank Vasco Carvalho, Hiro Ishise, Makoto Nirei, Tack Yun, and partcipants at European Conference on Complex Systems held in Vienna on September 12–16, 2011 for helpful comments and suggestions, and Masahiro Miyatani for his careful explanation of the TDB data. This research forms part of a project on “Designing Interfirm Networks to Achieve Sustainable Economic Growth” carried out at Hitotsubashi University with financial support from the Ministry of Education, Culture, Sports, Science, and Technology. The dataset we use in this paper is compiled jointly by Teikoku Databank, Ltd. and the HIT-TDB project of Hitotsubashi University.

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Copyright information

© Springer Japan 2015

Authors and Affiliations

  • Takayuki Mizuno
    • 1
    • 2
    • 3
    • 4
    • 5
    Email author
  • Wataru Souma
    • 6
  • Tsutomu Watanabe
    • 4
    • 5
  1. 1.National Institute of InformaticsChiyoda-kuJapan
  2. 2.Department of InformaticsThe Graduate University for Advanced StudiesChiyoda-kuJapan
  3. 3.PRESTOJapan Science and Technology AgencyChiyoda-kuJapan
  4. 4.Graduate School of EconomicsThe University of TokyoBunkyo-kuJapan
  5. 5.The Canon Institute for Global StudiesChiyoda-kuJapan
  6. 6.College of Science and TechnologyNihon UniversityFunabashiJapan

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