Abstract
The paper analyses the network of relationships between large companies that defines the Japanese economy using ERGM (Exponential Random Graph Model) method. The Japanese economy, because of the presence of keiretsu groups and other corporate groups, is an excellent example of what can happen to a country’s economy if large corporations and financial institutions in the market operate in a closely interconnected, highly centralized and dependent network. This is an important issue, because this economic practice is happening globally right now. Therefore, the interpretation of the Japanese network and the analysis of its economic performance also reflect the long-term negative and positive effects of this trend.
Highlights
As the economy and economic actions are always embedded in society (Polányi, 1944, 2001), the functioning of different national economies, in addition to the global context, is always determined by the history, social relations and social network of the given culture
It is worth looking at an economy like that of Japan’s, operating in a close and dense network, and analyzing the network factors that explain their operation
Starting with a review of the historical development of this economy, I have interpreted the available data with an ERGM network analysis
Summary
As the economy and economic actions are always embedded in society (Polányi, 1944, 2001), the functioning of different national economies, in addition to the global context, is always determined by the history, social relations and social network of the given culture. There are long-term and close credit relationships between banks and large corporations, resulting in a highly hierarchical structure in which the central network positions are occupied by leading banks This is accompanied by a strong asymmetric information problem in the market (De Masi et al, 2011). Zaibatsu firms, which have optimized their mutual returns within a strong hierarchical system, can be interpreted as a form of early-capitalist Japanese innovation through closely inter-related activities (Imai, 1987) These economic networks have created a strong control structure through asset-share ownership, human relationships, trust, and centralized purchase and marketing.
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