This paper uses firm‐level data to examine how supply chain networks affected the recovery of firms from the Great East Japan Earthquake. Extensive supply chains can negatively affect recovery through higher vulnerability to network disruption and positively through support from trading partners, easier search for new partners, and general benefits of agglomeration. Our results indicate that networks with firms outside of the impacted area contributed to the earlier resumption of production, whereas networks within the region contributed to sales recovery in the medium term. The results suggest that the positive effects of supply chains typically exceed the negative effects.