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Corporate competition: A self-organized network

  • Braha, Dan
  • Stacey, Blake
  • Bar-Yam, Yaneer
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    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.

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    File URL: http://mpra.ub.uni-muenchen.de/32142/1/MPRA_paper_32142.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 32142.

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    Date of creation: 2011
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    Handle: RePEc:pra:mprapa:32142
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    1. M. T. Gastner & M. E.J. Newman, 2006. "The spatial structure of networks," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, vol. 49(2), pages 247-252, 01.
    2. Jane Katz, 2002. "Get me headquarters!," Regional Review, Federal Reserve Bank of Boston, issue Q 4, pages 9-19.
    3. Porta, Sergio & Crucitti, Paolo & Latora, Vito, 2006. "The network analysis of urban streets: A dual approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 369(2), pages 853-866.
    4. Fleming, Lee & Sorenson, Olav, 2001. "Technology as a complex adaptive system: evidence from patent data," Research Policy, Elsevier, vol. 30(7), pages 1019-1039, August.
    5. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
    6. 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.
    7. Olav Sorenson, 2003. "Social networks and industrial geography," Journal of Evolutionary Economics, Springer, vol. 13(5), pages 513-527, December.
    8. 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.
    9. Eocman Lee & Jeho Lee & Jongseok Lee, 2006. "Reconsideration of the Winner-Take-All Hypothesis: Complex Networks and Local Bias," Management Science, INFORMS, vol. 52(12), pages 1838-1848, December.
    10. Gripsrud, Geir & Gronhaug, Kjell, 1985. "Structure and Strategy in Grocery Retailing: A Sociometric Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 33(3), pages 339-47, March.
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