Recently, growth mechanism of firms in complex business networks became new targets of scientific study owing to increasing availability of high quality business firms’ data. Here, we paid attention to comprehensive data of M&A events for 40 years and derived empirical laws by applying methods and concepts of aggregation dynamics of aerosol physics. It is found that the probability of merger between bigger firms is bigger than that between smaller ones, and such tendency is enhancing year by year. We introduced a numerical model simulating the whole ecosystem of firms and showed that the system is already in an unstable monopoly state in which growth of middle sized firms are suppressed.
The world economy consists of highly interconnected and interdependent commercial and financial networks. Here, we develop temporal and structural network tools to analyze the state of the economy and the financial markets. Our analysis indicates that a strong clustering can be a warning sign. Reduction in diversity, which was an essential aspect of the dynamics surrounding the financial markets crisis of 2008, is seen as a key emergent feature arising naturally from the evolutionary and adaptive dynamics inherent to the financial markets. Similarly, collusion amongst construction firms in a number of regions in Japan in the 2000s can be identified with the formation of clusters of anomalous highly connected companies. V C 2013 Wiley Periodicals, Inc. Complexity 19: 22-36, 2013 Key Words: economics; evolutionary dynamics; network theory; quantitative finance. ANALYSIS 1.Dynamics of Financial MarketsI n order to investigate the dynamics of financial markets we have developed a simple multi agent network model for a basic financial system, comprising of three fundamental types of agents: Banks, Investors and Borrowers (see section 2 for details). Our approach to modeling this system is inspired by the modeling of societies and ecosystems, in which a key role is played by the This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.virtual intra and interdependence of species [1][2][3][4]. This translates in our model into a focus on: (i) the dynamics of infection of business strategies within the banking sector and of culture dissemination within the investment and fund management community, and (ii) the topological aspects of the network of interactions. In order to focus more clearly on the influence of the collective action of agents, and their interaction amongst FIGURE 1Crisis Mapping from Evolutionary Dynamics: Plot A shows the frequency of crisis and the relative number of times that each type of crisis scenario occurs. The front floor (dark blue) indicates the distributions when evolutionary dynamics are present, with realizations resulting in 1 or 2 crises being by far the most common. The back floor (green) showing the results without dynamics is entirely distributed into the first block (no crisis), indicating that evolutionary dynamics are an essential feature in order to see crises occur. Plot B illustrates the time line of crises as predicted by the model including the evolutionary dynamics for 1 crisis (light purple) and 2 crises (light yellow) simulations. Time is shown vertically, increasing downwards, while the horizontal axis denotes different realizations of the model. A crisis is defined when >2% of the Bank agents fail or require financial assistance over a year, which corresponds to the historical average registered in the first and second US banking crisis over the simulation period. 4 The fir...
The dynamical phase diagram of a network undergoing annihilation, creation, and coagulation of nodes is found to exhibit two regimes controlled by the combined effect of preferential attachment for initiator and target nodes during coagulation and for link assignment to new nodes. The first regime exhibits smooth dynamics and power law degree distributions. In the second regime, giant degree nodes and gaps in the degree distribution are formed intermittently. Data for the Japanese firm network in 1994 and 2014 suggests that this network is moving towards the intermittent switching region.
Understanding the fundamental mechanisms behind the complex landscape of corporate mergers and acquisitions is of crucial importance to economies across the world. Adapting ideas from the fields of complexity and evolutionary dynamics to analyse business ecosystems, we show here that ancestry, i.e. the cumulative sum of historical mergers across all ancestors, is the key characteristic to company mergers and acquisitions. We verify this by comparing an agent-based model to an extensive range of business data, covering the period from the 1830s to the present day and a range of industries and geographies. This seemingly universal mechanism leads to imbalanced business ecosystems, with the emergence of a few very large, but sluggish ‘too big to fail’ entities, and very small, niche entities, thereby creating a paradigm where a configuration akin to effective oligopoly or monopoly is a likely outcome for free market systems.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.