Japan's Long-Surviving Businesses

Japan has treasured eight of the world's ten oldest existing business, founded prior to the year 800, including Kongo Gimi founded in the year 578, oldest hotel of the world Nisiyama Onsen Keiunkan, founded in the year 705. World's oldest sake brewer, Sudo Honke, founded in 1141, Tanaka Iga, a company dealing with religious goods was set up in the year 885, confectionary business established in 1000, Ichimojiya Wasuke. Majority of the oldest companies are local and family owned that were established for trading along the route from Tokyo to Kyoto. The country is currently home to more than 50000 family businesses that are over 100 years old, of them 3886 have been around for more than 200 years. The land of longest surviving family business is Japan as there are 967 businesses founded prior to the year 1700 which are still in operation. The following table provides more insight about Japanese family business.

Oldest family businesses of Japan are mainly involved in products related to basic human activities necessary for daily life i.e. drinks, traditional confectionaries, soy sauce, miso, shipping, construction, food and herbal medicine. Japan is a country where 'family owned business' is considered to be of paramount importance, acceptance has provided owners with a rather pleasant work around.

Japan's Oldest Businesses: Of 517 Japanese business are founded before 1700 years and are the most common traders. A list of family business is as under; 53% of world's oldest businesses which are managed and controlled by families are located in Japan, while that number for Germany is 19% while after that no other country boasts more than 5%. According to the study done by Landsberg in 1983 and Goto 2005, the average age of the family firms in Japan is 52 years that is double that of the USA where the average age of the family firm is 24 years.

When we look into the roots of the family business of Japan, it is the commitment of family towards the business. The key driver for longevity is inherent emphasis on the honesty, diligence and morality to practice ethical conduct constitution and strong family structure with wide understanding and continuation of the core values, clear sense of purpose and long term vision for business. A hundred year old firm has clear vision for next hundred years and two hundred year old firm tries to visualize next two hundred years. This suggests that management approach is based on the long term perspective. The basic priority of the business operation is the family name.

Japanese family firms see customers as sustaining force for business and are dedicated to serve their need. It always tries to add value to products and services by 'Kaizen' system i.e. practice of constant improvement and innovation. Accepting change is one of the key factors for longevity. Family advocacy of simplicity and frugality is one important attributes for their success. For owner, profit is just reward of their work and not a driver of business. Notions of loyalty are central to the family firm operation. Business actively contributes to public welfare through business activities.

Long lived business is result of healthy relationship with the larger community. Japanese believe in personal relationship and emphasize that business is secondary to relationship.

The Japanese management always put people first. They regard their employee as a permanent resources and growth agent for business. Japanese management takes a long term view while appointing employees, provides best working environment and focuses on their development and loyalty. Committed employees facilitate and participate in successful transitions between generations.

Families have predefined policies and practice that directs family and business objective. In majority of cases these principles are written and preserved in the form of family's statement of belief that is known as code of behaviour that they pass on from generation to generation. Sometimes family code is expressed through a ceremony to reflect founder's philosophy for family and business. Family is determined to preserve and pass on values and business approach to the successor and even to the employees from time to time through rituals recalling their philosophy, value and vision. Many of the oldest family businesses have a well established constitution and code of conduct that clarify how family relationships are to be managed and also emphasizes on the importance of honesty, diligence and morality to practice ethical conduct and build strong family structure.

One of the most appealing mechanisms of good governance is the construction of the 'ie-institution'. Here 'Ie' means 'house' or 'family' that refers to a group of persons bonding together by obedience to the head. This group of persons includes family and non-family employees too. Ie-institution attempts to ensure prosperity and longevity to have same level of commitment and dedication for the success of the business. Japanese society emphasizes on team work, they don't pay attention to individual entity. This system ensures that everyone has a voice and is tuning the same melody.

Selecting leader is a key factor in business longevity. Adult adoption in a family business is a common practice when there is no obvious heir. 'Mukoyoshi', a technique where owner with no male heirs can legally adopt his son in law. It means that a man marrying the daughter of the family adopts the family name. This practice allows the business to be continued under the same name, even when there are no sons in a given generation. Large successful family run corporations such as Suzuki, Hoshi and many more are utilizing this strategy. Traditionally in a Japanese family business the patriarch wealth and business is transferred to the eldest son. Means wealth is transferred to a single member of the family. Japan's 81,000 adoptees are males between the ages of 25 and 30 - many of them are business competent who are legally adopted by the owners of corporations and put in management positions. Even in the rare case that a thoroughly vetted male adoptee fails in his leadership role, he can be disinherited, and another heir can be adopted to take his place.

On the other side corporate like Kongo Gumi adopted flexibility in selecting leaders is consider as a key for its longevity. Rather than always handing reins to the eldest son, chose the son who best exhibited the health, responsibility and talent for the job.

In conclusion, looking at various attribute, a clear sense of purpose and vision for the business, strong commitment for the family and business, understanding, continuation of the core family value and long term business vision, family constitution, morality to practice ethical conducts and strong family structure are considered as key driving force of the longevity. Be able to adapt change for competition, stay focused, conduct itself as a responsible member of the community, putting people first, team work, continually strive to improve its own capabilities, customer focus and practices of modesty and frugality are the foundation of Japanese business.