  Buyer--seller relationships among firms can be regarded as a longitudinal
network in which the connectivity pattern evolves as each firm receives
productivity shocks. Based on a data set describing the evolution of
buyer--seller links among 55,608 firms over a decade and structural equation
modeling, we find some evidence that interfirm networks evolve reflecting a
firm's local decisions to mitigate adverse effects from neighbor firms through
interfirm linkage, while enjoying positive effects from them. As a result, link
renewal tends to have a positive impact on the growth rates of firms. We also
investigate the role of networks in aggregate fluctuations.
