In this project, we examine the dynamics of inter-organizational networks, focusing on the "power of networks" as a source of Japanese firms' competiveness, driven by strong connections between organizations. There exists various costs including geographical friction in construction of inter-organizational networks, such as inter-firm transaction networks and networks related to knowledge spillover between organizations. By examining the effect of such costs, we will clarify the relationships between network dynamics and firm performance. In addition, while idiosyncratic firm shocks cause fluctuations in the macro economy and macro growth through inter-firm networks, changes in networks can function as absorption and amplification of propagation. By analyzing how the network responds to different shocks and how employment as another factor of production changes, we will clarify the mechanism of shock propagation. Furthermore, considering the structural change of firm dynamics, we analyze the role of firm networks in the firm lifecycle, the historical effect of firm growth, and determinant of the location pattern of economic activity.
June 11, 2018 - June 30, 2020