Firm-level propagation of shocks through supply-chain networks

Hiroyasu Inoue*, Yasuyuki Todo

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

56 Citations (Scopus)


Social and economic networks can be a channel of negative shocks and thus deteriorate resilience and sustainability in societies. This study focuses on supply chains, or supplier–customer networks of firms and examines how these supply chains enable production losses caused by natural disasters to propagate and persist in regions not directly affected by the disaster. We apply an agent-based model to the actual supply chains of nearly one million firms in Japan to estimate the direct and indirect effects of the 2011 Great East Japan earthquake. We then employ the same model to predict the effect of the Nankai Trough earthquake, a mega earthquake predicted to hit major industrial cities in Japan in the near future. We find that the indirect effects of the disasters on production due to propagation (10.6% of gross domestic product in the case of the Nankai earthquake) are substantially larger than their direct effects (0.5%). Our simulation analyses to compare the actual network with hypothetical networks suggest that these indirect effects are more prominent and persistent when supply chains are characterized by scale-free properties, difficulty in substitution among intermediate products, and complex cycles in networks.

Original languageEnglish
Pages (from-to)841-847
Number of pages7
JournalNature Sustainability
Issue number9
Publication statusPublished - 2019 Sep 1

ASJC Scopus subject areas

  • Global and Planetary Change
  • Food Science
  • Geography, Planning and Development
  • Ecology
  • Renewable Energy, Sustainability and the Environment
  • Urban Studies
  • Nature and Landscape Conservation
  • Management, Monitoring, Policy and Law


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