Proceedings of the 2016 Winter Simulation Conference T. M. K. Roeder, P. I. Frazier, R. Szechtman, E. Zhou, T. Huschka, and S. E. Chick, eds. THE IMPACT OF HUMAN RELATIONSHIP ON BANKRUPTCY-RELATED EVOLUTION OF INTER-FIRM TRADE NETWORK Shihan Wang Mohsen Jafari Songhori Shuang Chang Takao Terano Department of Computer Science, School of Computing Tokyo Institute of Technology 4259-J2-52, Nagatsuta-Cho, Modori-Ku Yokohama, 226-8502, JAPAN ABSTRACT This paper studies the impact of human relationship on the evolution of inter-firm trade network emerged from bankruptcy. Based on the extracted properties of Japanese firm data in 10 years, we propose an agent-based model and conduct series of simulation experiments to evaluate several aspects of human relationship effects. The simulation results indicate that human relationship delays the bankrupt spread and promotes the average performance of firms. By examining different scenarios, we found the influential features of human relationship that are likely to help firms to survive in the bankrupt propagation process. 1 INTRODUCTION The dynamic evolution of inter-firm trade network, which is generated from firms’ business interactions and represents economic activities (Ohnishi et al. 2010), attracts more and more attention in recent years. Like most inter-firm networks, inter-firm trade network keeps evolving slowly over time. However, when facing external influences like bankrupt, the evolution becomes very dramatic (Aggarwal and Subbian 2014). The bankrupt evolution of the inter-firm trade network, commonly known as bankrupt chain (Ikeda et al. 2007), has been interesting to many scholars. After a company goes bankrupt, the bankruptcy often causes a snowball effect within a short period (Gatti et al. 2009). Researches not only studied the statistical features by empirical analysis (Fujiwara 2008, Hong et al. 2007), but also modeled the dynamic bankrupt propagation using agent-based simulation approach (Battiston et al. 2007). However, the underlying factors of such evolution have often been ignored in the current literature. While the evolving phenomenon of inter-firm trade network is very complicated, it is important to understand its internal factors. Therefore, using an agent-based model, we aim to fill the gap of understanding one important mechanism of inter-firm bankrupt evolution, which is the human relationship. In this paper, human relationship is conceptualized as the inter-firm human-related tie by using senior executive information. As some of the executives belong to more than one firm, such human-related ties are constructed among the firms. We analyze the features from Japanese firms and based on which propose an agent-based model. By simulating the inter-firm trade network evolution, we made two main contributions on the impact of human relationship: first, evaluate the influence of human relationship in the inter-firm trade network evolution rising by bankrupt; second, measure the importance of different inter-firm human relationship in bankrupt diffusion process. The rest of this paper is organized as follows. In Section 2, we propose our research hypotheses and review their theoretical and practical base. Section 3 presents our agent-based model with the ODD 978-1-5090-4486-3/16/$31.00 ©2016 IEEE 3405