Production Networks, Geography, and Firm Performance

By Andrew B. Bernard, Andreas Moxnes, Yukiko U. Saito. Journal of Political Economy, 2019

482 citations recorded by the source corpus.

This paper examines the importance of buyer-supplier relationships for firm performance. We develop a model in which firms outsource tasks and search for suppliers. Lower search and outsourcing costs lead firms to search more and find better suppliers, which in turn drives down marginal costs. We test the theory by exploiting the opening of a high-speed train line in Japan, which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive data set on firms’ buyer-seller linkages, we find significant improvements in firm performance as well as creation of buyer-seller links, consistent with the model.

Subfields: Economics and Econometrics, Marketing

View Paper: https://www.semanticscholar.org/paper/01d98f58503ad1bca54f22802378b9d5a506119d

Citations in the corpus

• The Origins of Firm Heterogeneity: A Production Network Approach (2019, unknown): “…performance (e.g., Goldberg et al., 2010, Bøler et al., 2015, Manova et al., 2015, Fieler et al., 2018, Antràs et al., 2017, Boehm and Oberfield, 2020 and Bernard et al., 2019), while final consumer preferences affect sales on the demand side (e.g., Foster et al., 2016, Fitzgerald et al., 2016).”