The Impact of the Great East Japan Earthquake on Companies in the Non-affected Areas: Structure of the inter-company network of supply chains and its implication

Author Name SAITO Yukiko  (Fellow, RIETI)
Creation Date/NO. June 2012 12-J-020
Research Project Inter-organizational and Inter-inventors Geographical Proximity and Networks
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It has been perceived that many networks observed in the social sciences, including that involving inter-company, show the characteristics of a small world, in which many subjects are very closely related. Because the competitiveness of the Japanese industry is thought to depend on the strong linkages between transaction partners, such competitiveness is considered to be vulnerable to linkage-cutting phenomena, such as earthquakes.

In this paper, we examine how many companies in the non-affected areas have relationship with those in the affected area, using inter-company transaction data from approximately 800,000 companies. We find the following results. While the proportion of companies with transaction partners in the affected area is very small, accounting for less than 3% of total companies in areas other than Tohoku, the figure increases to 50% to 60% if second order companies, whose transaction partners have transaction partners in the affected areas, are included. Furthermore, the figure increases to nearly 90% if third order companies are included, indicating that most companies are indirectly related with those in the affected area.