Supply Chain Networks Promote the Resilience of Firms to Natural Disasters: Lessons from the Great East Japan Earthquake

Author Name TODO Yasuyuki  (Faculty Fellow, RIETI) /NAKAJIMA Kentaro  (Tohoku University) /Petr MATOUS  (University of Tokyo)
Creation Date/NO. April 2013 13-P-006
Research Project Study of the Creation of the Japanese Economy and Trade and Direct Investment
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This paper examines how supply chain networks affected the resilience of firms to the Great East Japan Earthquake, particularly looking at the effects on the time period before resuming operations after the earthquake and sales growth from the pre- to the post-earthquake period. The results indicate that the expansion of supply chain networks has two opposing effects on the resilience of firms to disasters. On the one hand, when firms are connected with more firms through supply chain networks, they are more likely to experience disruptions in supply and demand, which delay recovery. On the other hand, firms can benefit from diversified networks with suppliers and clients because they can substitute the surviving firms in the network for the damaged partners and receive support from them. Our results indicate that the latter's positive effect on recovery exceeds the former's negative effect for many types of network, implying that diversified supply chain networks lead to the resilience of firms to natural disasters.