Braha, Dan and Stacey, Blake and Bar-Yam, Yaneer (2011): Corporate competition: A self-organized network. Forthcoming in: Social Networks , Vol. doi:10, No. doi:10.1016/j.socnet.2011.05.004 (2011)
Download (2MB) | Preview
A substantial number of studies have extended the work on universal properties in physical systems to complex networks in social, biological, and technological systems. In this paper, we present a complex networks perspective on interfirm organizational networks by mapping, analyzing and modeling the spatial structure of a large interfirm competition network across a variety of sectors and industries within the United States. We propose two micro-dynamic models that are able to reproduce empirically observed characteristics of competition networks as a natural outcome of a minimal set of general mechanisms governing the formation of competition networks. Both models, which utilize different approaches yet apply common principles to network formation give comparable results. There is an asymmetry between companies that are considered competitors, and companies that consider others as their competitors. All companies only consider a small number of other companies as competitors; however, there are a few companies that are considered as competitors by many others. Geographically, the density of corporate headquarters strongly correlates with local population density, and the probability two firms are competitors declines with geographic distance. We construct these properties by growing a corporate network with competitive links using random incorporations modulated by population density and geographic distance. Our new analysis, methodology and empirical results are relevant to various phenomena of social and market behavior, and have implications to research fields such as economic geography, economic sociology, and regional economic development.
|Item Type:||MPRA Paper|
|Original Title:||Corporate competition: A self-organized network|
|English Title:||Corporate competition: A self-organized network|
|Keywords:||Organizational networks; Interfirm competition; Economic geography; Social networks; Spatial networks; Network dynamics; Firm size dynamics|
|Subjects:||Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology
F - International Economics > F0 - General
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms
C - Mathematical and Quantitative Methods > C0 - General
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D40 - General
Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D85 - Network Formation and Analysis: Theory
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis > R58 - Regional Development Planning and Policy
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R0 - General
L - Industrial Organization > L8 - Industry Studies: Services
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity
A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics
D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
L - Industrial Organization > L0 - General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location
L - Industrial Organization > L6 - Industry Studies: Manufacturing
D - Microeconomics > D4 - Market Structure, Pricing, and Design
L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction
D - Microeconomics > D0 - General
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change ; Industrial Price Indices
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
J - Labor and Demographic Economics > J1 - Demographic Economics > J10 - General
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
|Depositing User:||Dan Braha|
|Date Deposited:||11. Jul 2011 02:24|
|Last Modified:||14. Apr 2015 04:07|
Albert, R., Barabasi, A.-L., 2002. Reviews of Modern Physics 74, 47–97.
Albert, R., Jeong, H., Barabasi, A.-L., 2000. Error and attack tolerance of complex networks. Nature 406, 378–382.
Albert, R., Albert, I., Nakarado, G.L., 2004. Structural vulnerability of the North American power grid. Physical Review E 69 (2), 25103.
Amaral, L.A.N., Uzzi, B., 2007. Complex systems – a new paradigm for the integrative study of management, physical, and technological systems. Management Science 53 (7), 1033–1035.
Amaral, L.A.N., Scala, A., Barthélémy, M., Stanley, H.E., 2000. Proceedings of the National Academy of Sciences of the United States of America 97, 11149–11152.
Axtell, R.L., 2001. Zipf distribution of U.S. firm sizes. Science, 1818–1820.
Barabasi, A.-L., Albert, R., 1999. Emergence of scaling in random networks. Science 286, 509–512.
Barnett, W.P., Hansen, M.T., 1996. The red queen in organizational evolution. Strategic Management Journal 17, 139–157.
Barthelemy, M., 2003. Crossover from scale-free to spatial networks. Europhysics Letters 63, 915–921.
Baum, J., Haveman, H., 1997. Love thy neighbor? Differentiation and agglomeration in the Manhattan hotel industry, 1898–1990. Administrative Science Quarterly 42, 304–338.
Baum, J., Mezias, S., 1992. Localized competition and organizational failure in the Manhattan hotel industry, 1898–1990. Administrative Science Quarterly 37, 580–604.
Boccaletti, S., Latora, V., Moreno, Y., Chaves, M., Hwang, D.-U., 2006. Complex networks: structure and dynamics. Physics Reports 424, 175–308.
Braha, D., Bar-Yam, Y., 2004. The topology of large-scale engineering problem solving networks. Physical Review E 69 (1), 016113-1–016113-7.
Braha, D., Bar-Yam, Y., 2007. The statistical mechanics of complex product development: empirical and analytical results. Management Science 53 (7), 1127–1145.
Carroll, G., 1985. Concentration and specialization: dynamics of niche width in population of organizations. American Journal of Sociology 90, 1263–1283.
Clauset, A., Shalizi, C.R., Newman, M.E.J., 2009. Power-law distributions in empirical data. SIAM Review 51, 661–703.
Cohen, R., Erez, K., ben-Avraham, D., Havlin, S., 2000. Physical Review Letters 85, 4626.
Costa, L.daF., Rodrigues, F.A., Travieso, G., Villas Boas, P.R., 2007. Advances in Physics 56 (1), 167–242.
Eguıluz, V.M., Chialvo, D.R., Cecchi, G.A., Baliki, M., Apkarian, A.V., 2005. Scale-free brain functional networks. Physical Review Letters 94 (1), 18102.
Fleming, L., Sorenson, O., 2001. Technology as a complex adaptive system: evidence from patent data. Research Policy 30, 1019–1039.
Gastner, M.T., Newman, M.E.J., 2006. The spatial structure of networks. The European Physical Journal B 49, 247–252.
Google, Inc. http://www.google.com/intl/en/jobs/locations.html (accessed 22.10.09).
Grabher, G., 2006. Trading routes, bypasses, and risky intersections: mapping the travels of ‘networks’ between economic sociology and economic geography. Progress in Human Geography 30 (2), 163–189.
Granovetter, M., 1985. Economic action and social structure: the problem of embeddedness. American Journal of Sociology 91, 481–510.
Gripsrud, G., Gronhaug, K., 1985. Structure and strategy in grocery retailing: a sociometric approach. Journal of Industrial Economics 33, 339–347.
Guimerà, R., Mossa, S., Turtschi, A., Amaral, L.A.N., 2005. The worldwide air transportation network: anomalous centrality, community structure, and cities’ global roles. Proceedings of the National Academy of Sciences of the United States of America 102, 7794–7799.
Gulati, R., 1995. Social structure and alliance formation patterns: a longitudinal analysis. Administrative Science Quarterly 40, 619–652.
Gulati, R., 1999. Network location and learning: the influence of network resources and firm capabilities on alliance formation. Strategic Management Journal 20, 397–420.
Gulati, R., Gargiulo, M., 1998. Where do interorganizational networks come from? American Journal of Sociology 104 (5), 1439–1493.
Hannan, M.T., Carroll, G.R., 1992. Dynamics of Organizational Populations. Oxford University Press, New York.
Hayashi, Y., 2006. A review of recent studies of geographical scale-free networks. IPSJ Transactions. Special Issue on Network Ecology 47 (3), 776–785.
Herrmann, C., Barthelemy, M., Provero, P., 2003. Connectivity distribution of spatial networks. Physical Review E 68, 026128-1–026128-6.
Ijiri, Y., Simon, H., 1977. Skew Distributions and the Sizes of Business Firms. North-Holland, Amsterdam.
Isard, W., 1954. Location theory and trade theory: short-run analysis. Quarterly Journal of Economics 68, 305–322.
Katz, J., 2002. Get me headquarters! Regional Review (Q4), 9–19.
Krugman, P., 1996. The Self-organizing Economy. Blackwell, Malden, MA.
Laherrere, J., Sornette, D., 1998. Stretched exponential distributions in Nature and Economy: fat tails with characteristic scales. European Physical Journal B 2, 525–539.
Lakhina, A., Byers, J.W., Crovella, M., Matta, I., 2002. On the geographic location of Internet resources. In: Proceedings of the ACM SIGCOMM Internet Measurement Workshop , Marseilles.
Lambiotte, R., Blondel, V.D., de Kerchove, C., Huens, E., Prieur, C., Smoreda, Z., Van Dooren, P., 2008. Geographical dispersal of mobile communication networks. Physica A 387, 5317–5325.
Lee, E., Lee, J., Lee, J., 2006. Reconsideration of the winner-take-all hypothesis: complex networks and local bias. Management Science 52 (12), 1838–1848.
Lee, S.H., Kim, P.-J., Jeong, H., 2006. Statistical properties of sampled networks. Physical Review E 73, 016102-1–016102-7.
Liben-Nowell, D., Novak, J., Kumar, R., Raghavan, P., Tomkins, A., 2005. Geographic routing in social networks. Proceedings of the National Academy of Sciences of the United States of America 102 (33), 11623–11628.
Lim, M., Braha, D., Wijesinghe, S., Tucker, S., Bar-Yam, Y., 2007. Preferential detachment in broadcast signaling networks: connectivity and cost trade-off. Europhysics Letters 79 (5), 58005-1–58005-6.
Lincoln, J., Michael, G., Christina, A., 1996. Keiretsu networks and corporate performance in Japan. American Sociological Review 61, 67–88.
Malcai, O., Biham, O., Solomon, S., 1999. Power-law distributions and Lévy-stable intermittent fluctuations in stochastic systems of many autocatalytic elements. Physical Review E 60, 1299–1303.
Manna, S.S., Sen, P., 2002. Modulated scale-free network in the Euclidean space. Physical Review E 66, 066114-1–066114-4.
Owen-Smith, J., Powell, W.W., 2004. Knowledge networks as channels and conduits: the effects of spillovers in the Boston biotechnology community. Organization Science 15, 5–21.
Pastor-Satorras, R., Vespignani, A., 2002. Epidemic dynamics in finite size scale-free networks. Physical Review E 65 (3), 035108–035111.
Podolny, J.M., 1993. A status-based model of market competition. American Journal of Sociology 98, 829–872.
Podolny, J.M., 1994. Market uncertainty and the social character of economic exchange. Administrative Science Quarterly 39, 458–483.
Podolny, J.M., Stuart, T.E., Hannan, M.T., 1996. Networks, knowledge, and niches: competition in the worldwide semiconductor industry, 1984–1991. The American Journal of Sociology 102 (3), 659–689.
Porac, J., Thomas, H., Wilson, F., Paton, D., Kanfer, A., 1995. Rivalry and the industry model of Scottish knitwear producers. Administrative Science Quarterly 40, 203–227.
Porta, S., Crucitti, P., Latora, V., 2006. The network analysis of urban streets: a dual approach. Physica A: Statistical Mechanics and Its Applications 369 (2), 853–866.
Powell, W.W., White, D.R., Koput, K.W., Owen-Smith, J., 2005. Network dynamics and field evolution: the growth of interorganizational collaboration in the life sciences. American Journal of Sociology 110, 1132–1205.
Rosen, S., 1981. The economics of superstars. The American Economic Review 71, 845–858.
Rothenberg, R.B., 1995. Commentary: sampling in social networks. Connections 18 (1), 104–110.
Rozenfeld, A.F., Cohen, R., ben-Avraham, D., Havlin, S., 2002. Scale-free networks on lattices. Physical Review Letters 89, 218701-1–218701-4.
Ruef, M., 2000. The emergence of organizational forms: a community ecology approach. The American Journal of Sociology 106 (3), 658–714.
Sole, R.V., Bascompte, J., 2006. Self-Organization in Complex Ecosystems. Princeton University Press, New Jersey.
Sorenson, O., 2003. Social networks and industrial geography. Journal of Evolutionary Economics 13, 513–527.
Sorenson, O., Stuart, T.E., 2001. Syndication networks and the spatial distribution of venture capital investments. The American Journal of Sociology 106 (6), 1546–1588.
Stouffer, S.A., 1940. Intervening opportunities: a theory relating mobility and distance. American Sociological Review 5, 845–867.
Stuart, T.E., 1998. Network positions and propensities to collaborate: an investigation of strategic alliance formation in a high-technology industry. Administrative Science Quarterly 43, 668–698.
Sutton, J., 1997. Gibrat’s legacy. Journal of Economic Literature 35 (1), 40–59.
Waxman, B., 1988. Routing of multipoint connections. IEEE Journal on Selected Areas in Communications 6, 1617–1622.
Yook, S.-H., Jeong, H., Barabasi, A.-L., 2002. Modeling the Internet’s large-scale topology. Proceedings of the National Academy of Sciences of the United States of America 99 (21), 13382–13386.
Zipf, G.K., 1946. The P1P2/D hypothesis: on the intercity movement of persons. American Sociological Review 11, 677–686.
Zipf, G.K., 1949. Human Behavior and the Principle of Least Effort. Addison-Wesley, Reading, MA.