Scale-free models for the structure of business firm networks

Maksim Kitsak, Massimo Riccaboni, Shlomo Havlin, Fabio Pammolli, H. Eugene Stanley

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


We study firm collaborations in the life sciences and the information and communication technology sectors. We propose an approach to characterize industrial leadership using k -shell decomposition, with top-ranking firms in terms of market value in higher k -shell layers. We find that the life sciences industry network consists of three distinct components: a "nucleus," which is a small well-connected subgraph, "tendrils," which are small subgraphs consisting of small degree nodes connected exclusively to the nucleus, and a "bulk body," which consists of the majority of nodes. Industrial leaders, i.e., the largest companies in terms of market value, are in the highest k -shells of both networks. The nucleus of the life sciences sector is very stable: once a firm enters the nucleus, it is likely to stay there for a long time. At the same time we do not observe the above three components in the information and communication technology sector. We also conduct a systematic study of these three components in random scale-free networks. Our results suggest that the sizes of the nucleus and the tendrils in scale-free networks decrease as the exponent of the power-law degree distribution λ increases, and disappear for λ3. We compare the k -shell structure of random scale-free model networks with two real-world business firm networks in the life sciences and in the information and communication technology sectors. We argue that the observed behavior of the k -shell structure in the two industries is consistent with the coexistence of both preferential and random agreements in the evolution of industrial networks.

Original languageEnglish
Article number036117
JournalPhysical Review E
Issue number3
StatePublished - 29 Mar 2010


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