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Corporate competition: A self-organized network

Author

Listed:
  • Braha, Dan
  • Stacey, Blake
  • Bar-Yam, Yaneer

Abstract

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.

Suggested Citation

  • Braha, Dan & Stacey, Blake & Bar-Yam, Yaneer, 2011. "Corporate competition: A self-organized network," MPRA Paper 32142, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32142
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    File URL: https://mpra.ub.uni-muenchen.de/32142/1/MPRA_paper_32142.pdf
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    References listed on IDEAS

    as
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    4. Lambiotte, Renaud & Blondel, Vincent D. & de Kerchove, Cristobald & Huens, Etienne & Prieur, Christophe & Smoreda, Zbigniew & Van Dooren, Paul, 2008. "Geographical dispersal of mobile communication networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(21), pages 5317-5325.
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    6. Jane Katz, 2002. "Get me headquarters!," Regional Review, Federal Reserve Bank of Boston, issue Q 4, pages 9-19.
    7. Dan Braha & Yaneer Bar-Yam, 2007. "The Statistical Mechanics of Complex Product Development: Empirical and Analytical Results," Management Science, INFORMS, vol. 53(7), pages 1127-1145, July.
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    Cited by:

    1. Michael Fritsch & Florian Noseleit, 2013. "Indirect employment effects of new business formation across regions: The role of local market conditions," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 361-382, June.

    More about this item

    Keywords

    Organizational networks; Interfirm competition; Economic geography; Social networks; Spatial networks; Network dynamics; Firm size dynamics;

    JEL classification:

    • Z1 - Other Special Topics - - Cultural Economics
    • F0 - International Economics - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C0 - Mathematical and Quantitative Methods - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • L8 - Industrial Organization - - Industry Studies: Services
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L0 - Industrial Organization - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
    • D0 - Microeconomics - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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