From culture to business, Japan sits a world apart—an isolated nation that through exceptional circumstances has allowed several thousand firms to remain in family hands for more than a century. Michael Finnigan takes a look
The island nation of Japan is home to some of the world’s oldest family businesses. One of the most notable, Nishiyama Onsen Keiunkan, a hot spring in the Yamanashi Prefecture, has been operating since 705 AD. It is a country with such a prolific history of family-run businesses that today it lays claim to eight of the world’s 10 longest running. So what is it about the Land of the Rising Sun that has allowed its businesses to survive for so long?
One of the most compelling reason stems from Japan’s long history of provincial war: in the 12th century, warrior families respected bloodline as tradition, but would also name young men from other families as successors, since it was imperative they were both intelligent and physically strong. This family principle is known as “IÉ” adoption.
While the concept fell out of favour in the 20th century, it came back with a vengeance after World War II. Adoption rates in Japan are the highest in the world, in 2011 there were around 81,000, with roughly 98% of those men in their 20s and 30s, who go on to become the head of the family’s business.
Other reasons for the longevity of Japanese family businesses might include the long lifespan of the Japanese people and ensuing the economic stability. Then there is the importance of tradition among the Japanese people: many of the oldest family businesses operate in fields of great cultural importance, such as in sake and paper lanterns.
While it is difficult to pin down the exact reason for the longevity of family businesses in Japan, unusual phenomena often crop up on islands. In biology, for example, naturalists have discovered that the size of animals isolated on an island increases dramatically in comparison to their mainland relatives. The same can be said of family businesses in Japan, which have survived beyond normal expectations. Perhaps then the answer for prolonging the life of your family business, then, might be to relocate to an isolated island in the middle of the ocean.