Structure of global buyer-supplier networks and its implications for conflict minerals regulations

Takayuki Mizuno, Takaaki Ohnishi and Tsutomu Watanabe
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Takayuki Mizuno: National Institute of Informatics, Department of Informatics, SOKENDAI, PRESTO, Japan Science and Technology Agency, The Canon Institute for Global Studies,
Takaaki Ohnishi: Graduate School of Information Science and Technology, University of Tokyo, The Canon Institute for Global Studies,
Tsutomu Watanabe: Graduate School of Economics, University of Tokyo, The Canon Institute for Global Studies

No 53, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: We investigate the structure of global inter-firm linkages using a dataset that contains information on business partners for about 400,000 firms worldwide, including all the firms listed on the major stock exchanges. Among the firms, we examine three networks, which are based on customer-supplier, licensee-licensor, and strategic alliance relationships. First, we show that these networks all have scale-free topology and that the degree distribution for each follows a power law with an exponent of 1.5. The shortest path length is around six for all three networks. Second, we show through community structure analysis that the firms comprise a community with those firms that belong to the same industry but different home countries, indicating the globalization of firms’ production activities. Finally, we discuss what such production globalization implies for the proliferation of conflict minerals (i.e., minerals extracted from conflict zones and sold to firms in other countries to perpetuate fighting) through global buyer-supplier linkages. We show that a limited number of firms belonging to some specific industries and countries plays an important role in the global proliferation of conflict minerals. Our numerical simulation shows that regulations on the purchases of conflict minerals by those firms would substantially reduce their worldwide use.

Keywords: Global supply chain; Inter-firm network; Scale-free; Community detection; Conflict minerals (search for similar items in EconPapers)
Pages: 19 pages
Date: 2015-05
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