Under the COVID pandemic, more and more family businesses have asked the bankruptcy procedures. This is not only due to their financial status but also the lack of successors.

As many of JPs family businesses have had that successor issue, under COVID, they easily tend to give up keeping their businesses.

 

Around 2014, the research dealing with that issue as well as family business released by the business school called Globis. Professor Takubo, wrote a paper the secrets of long lasting Japanese companies with 300 yrs of history, and summarized the outcome into a book.  https://mba.globis.ac.jp/curriculum/detail/crt/teacher/takubo_yoshihiko.html

 

The principal reasons for the resilience of Japanese family businesses are as follows:

1 Political stability- A few invasions and wars-

2 Japanese culture; values for harmony, diligence, tradition, and simplicities

3 Corporate mindset; going concern is highly respected

4 Moderate ambition

5 Financial structures

6 Value transition-education of ethical code and business philosophy-

7 Community oriented

8 Worship towards rituals, mentality, and mind

 

Among above, I found 4, 5, and 8 look extremely important and quite unique.

 

Let me add comments on them. In this book, a company called Okaya, iron products manufacture was analyzed as an example. They have around 350 years of history, are listed and the family has remained as the business top as well as the principal owner.

 

4 Moderate ambition

Usually, venture businesses have been forced to strive themselves until they make a sort of breakthrough. On the other hand, family firms tend to seek a moderate growth, not a large growth. This seems to be an unique Japanese culture compared with that of Western society.

 

Why do they seek for moderate growth? This is because they fundamentally desire to survive. In other words, all they wish is keeping their business and handing it over to the next generation.

 

5 Financial structures

Due to its history, a family business can invest their earnings into the real estate and corporate stocks. This would contribute to create additional capital reserve in case the main business is in crisis, such as COVID now. Moreover, FB can maintain their corporate stocks among the family not to spread into the market or any other third party except for family members. This has also allowed family businesses to diversify their portfolio, which can help the corporate, most likely the holding company of owner family, to grow with stability.

 

8 Worship towards rituals, mentality, and mind

Like Okaya case, many other family businesses have been devoting themselves to conduct important ritual events. This is from their experiences. Under the crisis, even though they worked hard and made the best efforts, the environment and unexpected event has definitely affect the business. They believe this is due to the work of “something great”. They call them God, Heaven, or Super-self.

 

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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