Fragile, yet resilient: Adaptive decline in a collaboration network of firms

TL;DR

This paper investigates how collaboration networks of firms decline yet remain resilient through adaptive mechanisms, using extensive data and simulations to measure their ability to recover from shocks.

Contribution

It introduces a method to quantify resilience in declining collaboration networks by analyzing deviations from expected drop-out dynamics due to adaptivity.

Findings

Declining networks can still mitigate shocks through adaptive responses.

Simulations show networks recover better than expected when adaptive behavior occurs.

Deviations from expected decline serve as a resilience measure.

Abstract

The dynamics of collaboration networks of firms follow a life-cycle of growth and decline. That does not imply they also become less resilient. Instead, declining collaboration networks may still have the ability to mitigate shocks from firms leaving, and to recover from these losses by adapting to new partners. To demonstrate this, we analyze 21.500 R\&D collaborations of 14.500 firms in six different industrial sectors over 25 years. We calculate time-dependent probabilities of firms leaving the network and simulate drop-out cascades, to determine the expected dynamics of decline. We then show that deviations from these expectations result from the adaptivity of the network, which mitigates the decline. These deviations can be used as a measure of network resilience.