  Production networks are integral to economic dynamics, yet dis-aggregated
network data on inter-firm trade is rarely collected and often proprietary.
Here we situate company-level production networks among networks from other
domains according to their local connectivity structure. Through this lens, we
study a regional and a national network of inferred trade relationships
reconstructed from Dutch national economic statistics and re-interpret prior
empirical findings. We find that company-level production networks have
so-called functional structure, as previously identified in protein-protein
interaction (PPI) networks. Functional networks are distinctive in their
over-representation of closed squares, which we quantify using an existing
measure called spectral bipartivity. Shared local connectivity structure lets
us ferry insights between domains. PPI networks are shaped by complementarity,
rather than homophily, and we use multi-layer directed configuration models to
show that this principle explains the emergence of functional structure in
production networks. Companies are especially similar to their close
competitors, not to their trading partners. Our findings have practical
implications for the analysis of production networks and a thorough
understanding of their local connectivity structure will help us better reason
about the micro-economic mechanisms behind their routine function, failure, and
growth.
