Corporate Competition: A Self-Organized Network

Social Networks, Vol. 33, Issue 3, pp. 219-230, July 2011

49 Pages Posted: 5 Jul 2011 Last revised: 4 Aug 2011

See all articles by Dan Braha

Dan Braha

New England Complex Systems Institute

Blake Stacey

New England Complex Systems Institute

Yaneer Bar-Yam

New England Complex Systems Institute

Date Written: July 4, 2011

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.

Keywords: Organizational networks, Interfirm competition, Economic geography, Social networks, Spatial networks, Network dynamics, Firm size dynamics

JEL Classification: A14, D40, L1, L2, R1, R3, B4

Suggested Citation

Braha, Dan and Stacey, Blake and Bar-Yam, Yaneer, Corporate Competition: A Self-Organized Network (July 4, 2011). Social Networks, Vol. 33, Issue 3, pp. 219-230, July 2011, Available at SSRN: https://ssrn.com/abstract=1878248

Dan Braha (Contact Author)

New England Complex Systems Institute ( email )

277 Broadway
Cambridge, MA 02138
United States

Blake Stacey

New England Complex Systems Institute ( email )

24 Mt. Auburn St.
Cambridge, MA 02138
United States

Yaneer Bar-Yam

New England Complex Systems Institute ( email )

24 Mt. Auburn St.
Cambridge, MA 02138
United States

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