Do inter-firm networks sustain the resilience of regional industrial ecosystems? A network-based analysis of the South Korean automotive industry

Firms may grow and decline, and their impact on the regional economy can be attributed not only to each firm but also to their inter-firm networks in the region. Therefore, firms and their connectivity should be understood within the context of the regional industrial ecosystem. To empirically show the role of inter-firm networks for the sustainability of the regional industrial ecosystem, this study analyses the automotive industry in South Korea. The Automobile Parts Yearbook, the main data source for the study, provides the addresses of 892 firms and the connectivity between five major automakers and their subcontractors. A network-based approach is chosen to untangle the complex production network and compare the network structure by region. Specifically, the number of nodes, links and connections, as well as density and modularity measures, are analytically compared across six sub-regions in the country. There are more links within the groups than between the groups, which suggests preferential attachment in the network structure. Multiple centralised structures are observed to exist around the five major automakers in sub-regions in South Korea. The empirical results of the paper imply that firms with multiple trading networks in the regional industrial ecosystem tend to recover from an industrial crisis or employment shock crisis more successfully than companies with a single trading network. Overall, these findings highlight the importance of understanding the role of inter-firm networks in regional industrial ecosystems for promoting sustainability and resilience.