HOW DO SUPPLY CHAIN NETWORKS AFFECT THE RESILIENCE OF FIRMS TO NATURAL DISASTERS? EVIDENCE FROM THE GREAT EAST JAPAN EARTHQUAKE

Authors


  • This research was conducted as part of a project entitled “Study of the Creation of the Japanese Economy and Trade and Direct Investment,” undertaken at the Research Institute of Economy, Trade, and Industry (RIETI). The authors would like to thank RIETI for providing financial support and the firm-level data used in the analysis and would like to thank Masahisa Fujita, Masayuki Morikawa, Ryuhei Wakasugi, the co-editor, and three anonymous referees for their helpful comments. Moreover, the authors thank the managers of firms in the areas impacted by the Great East Japan Earthquake who responded to the firm-level survey conducted by RIETI even though they were in difficult situations after the earthquake. Without their cooperation, this study could not have been completed or even started. The opinions expressed and arguments employed in this paper are the sole responsibility of the authors and do not necessarily reflect those of RIETI, the University of Tokyo, Tohoku University, or any institution with which the authors are affiliated.

ABSTRACT

This paper uses firm-level data to examine how supply chain networks affected the recovery of firms from the Great East Japan Earthquake. Extensive supply chains can negatively affect recovery through higher vulnerability to network disruption and positively through support from trading partners, easier search for new partners, and general benefits of agglomeration. Our results indicate that networks with firms outside of the impacted area contributed to the earlier resumption of production, whereas networks within the region contributed to sales recovery in the medium term. The results suggest that the positive effects of supply chains typically exceed the negative effects.

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