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How Do Supply Chain Networks Affect the Resilience of Firms to Natural Disasters? Evidence from the Great East Japan Earthquake

  • TODO Yasuyuki
  • NAKAJIMA Kentaro
  • Petr MATOUS

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.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13028.

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Length: 32 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:eti:dpaper:13028
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  1. Henriet, Fanny & Hallegatte, St├ęphane & Tabourier, Lionel, 2012. "Firm-network characteristics and economic robustness to natural disasters," Journal of Economic Dynamics and Control, Elsevier, vol. 36(1), pages 150-167.
  2. St├ęphane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(2), pages 14-24, 07.
  3. Donald R. Davis & David E. Weinstein, 2002. "Bones, Bombs, and Break Points: The Geography of Economic Activity," American Economic Review, American Economic Association, vol. 92(5), pages 1269-1289, December.
  4. Hallegatte, Stephane, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Policy Research Working Paper Series 6047, The World Bank.
  5. Mark Skidmore & Hideki Toya, 2002. "Do Natural Disasters Promote Long-Run Growth?," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 664-687, October.
  6. Y. Fujiwara & H. Aoyama, 2010. "Large-scale structure of a nation-wide production network," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, vol. 77(4), pages 565-580, October.
  7. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
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