Shock Propagation within Multisector Firms

64 Pages Posted: 14 Aug 2021 Last revised: 1 Jul 2022

See all articles by Jay Hyun

Jay Hyun

HEC Montréal

Ziho Park

National Taiwan University

Vladimir Smirnyagin

Yale University

Date Written: June 30, 2022


This paper documents an important role multisector firms play for the cross-sectoral propagation of shocks in the context of the China shock. In particular, we show that employment of an establishment in a given industry is negatively affected by the shock that hits establishments operating in other industries within the same firm. We explore a range of explanations for our findings, highlighting the role of firm diversification and within-firm input-output linkages across sectors. At the sectoral level, the shock that propagates through firms' internal networks has a sizable impact on industry-level employment dynamics.

Keywords: Multisector firms, networks, shock propagation, firm diversification, import competition

JEL Classification: D22, F14, F40, L14, L22

Suggested Citation

Hyun, Jay and Park, Ziho and Smirnyagin, Vladimir, Shock Propagation within Multisector Firms (June 30, 2022). Available at SSRN: or

Jay Hyun (Contact Author)

HEC Montréal ( email )

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Montréal, Quebec H4P 0A4

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Ziho Park

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
+82 01095092521 (Phone)

Vladimir Smirnyagin

Yale University ( email )

New Haven, CT
United States

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