Fragile, Yet Resilient: Adaptive Decline in a Collaboration Network of Firms

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.