Family businesses and longevity: the Japanese example

Some of the oldest family businesses in the world are Japanese. But why do these businesses last longer than those from other countries? And what can family businesses in other countries learn from them?

Here are some examples of Japanese family businesses that have been around for a long time:

  • Sudo Honke, a maker of sake, has been around since 1141 and is currently managed by the 55th generation.
  • Hoshi Ryokan, a hotel, has been owned by the same family since 718.
  • Kikkoman, the famous maker of soy sauce, traces its origins back to the early 17th century. The company is controlled by the Mogi and Takanashi families.

Of course, there are examples of very old family businesses in other countries, and Japan, like most other countries, has many new family businesses. Nevertheless, there are some common factors among Japanese family businesses that help them to survive for longer:

  • Adult adoption. The adoption of a non-related adult into a family business when there is no obvious heir is something particular to Japan. It normally involves men marrying into a family and adopting the family name. Many commentators say that it is a good way to bring in talent from outside of the family, and to make them family at the same time. For example, Mushakouji Senke – one of the most famous schools of tea ceremony – which was established in the 16th century by Rikyu, is now in its 15th generation. It includes some heirs from outside the family.
  • Community. Most Japanese family businesses have strong links to the communities in which they are based – and even to other communities where they have offices or factories. This means that what is good for the community is good for the company, and vice versa. Family businesses have often been contributing to their communities for a long time. For example, the confectioner Akafuku has invested about US$1b in the redevelopment of the city of Ise.
  • Adaptability. For the most part, family businesses in Japan are very adaptable. They move quickly if they need to change. But when change isn’t necessary, they adhere to their principles.
  • Profit. There is some evidence to suggest that Japanese businesses have a different attitude toward profit than their Western counterparts. They see it as part of the overall business experience, rather than as something that necessarily drives the business. This attitude can help create great loyalty among staff at family businesses, especially when times are tough.

All family businesses have much to learn from each other, no matter where they are from. But the unique factors that underpin family businesses in Japan should make them of special interest to the rest of the world.

Makoto Hara, Executive Director, Family Business Leader, EY Japan

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