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Business transactions and ownership ties between firms

Author

Listed:
  • László Lőrincz

    (Centre for Economic and Regional Studies, Corvinus University of Budapest, Corvinus Institute for Advanced Studies)

  • Sándor Juhász

    (Corvinus University of Budapest, Corvinus Institute for Advanced Studies, Centre for Economic and Regional Studies)

  • Rebeka O. Szabó

    (Corvinus University of Budapest, Corvinus Institute for Advanced Studies)

Abstract

In this study we investigate the creation and persistence of interfirm ties in a large-scale business transaction network. Transaction ties, firms buying or selling products or services can be the outcome of pure business motivations, but the social connections of owners or the geographical location of companies may also influence their development. We build the transaction and the ownership networks of firms in Hungary for 2016 and 2017 from two administrative datasets and identify multi-layer network motifs to predict the creation and persistence of business transactions. We show that direct or indirect relationships in this two-layered network contribute to both the creation and persistence of business transaction ties. We find a positive, but smaller impact of geographic proximity and industrial similarity of firms. For our estimations, we utilize loglinear models and emphasize their efficiency in predicting links in such large networks. We contribute to the literature by illustrating business connection patterns in a nationwide multilayer interfirm network.

Suggested Citation

  • László Lőrincz & Sándor Juhász & Rebeka O. Szabó, 2022. "Business transactions and ownership ties between firms," CERS-IE WORKING PAPERS 2216, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2216
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    transaction network; ownership network; multilayer network; network motifs; tie creation; tie persistence;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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