Online ISSN 1347-4456 Print ISSN 1347-4464

ABAS: Annals ofBusiness AdministrativeScienceVol. 1, No. 3, October 2002

SHIMIZU, Takashi

39

FUJITA, Hideki

47

IGARI, Eijiro

57

The longevity of the Japanese big businesses

The reproduction of Hofstede Model

Learning process of core technology in sporting gun industry of Japan

http://www.gbrc.jp© 2002 Global Business Research CenterAnnals of Business Administrative ScienceVol. 1, No. 3, October 2002

CHIEF EDITOR

Junjiro Shintaku

University of TokyoEDITORIAL BOARD

Makoto Abe
University of Tokyo
Takahiro Fujimoto University of Tokyo
Makoto Kasuya
University of Tokyo
Hotaka Katahira
University of Tokyo
Nobuo Takahashi University of Tokyo
Technical Editor: Maki Nishida, Global Business Research Center

Annals of Business Administrative Science is published quarterly in January, April,
July, and October, by Global Business Research Center, Marunouchi, Chiyoda-ku, Tokyo,
JAPAN. http://www.gbrc.jp

Annals of Business Administrative Science Vol.1, No.3 (October 2002)

The Longevity of the Japanese Big Businesses
Takashi SHIMIZU
Graduate School of Arts and Sciences, University of Tokyo
E-mail: tshimizu@waka.c.u-tokyo.ac.jp

Abstract: Though survival is important to firms, especially to the Japanese bigbusinesses, there are few empirical studies on their longevity. This paper conducts
the statistical analysis on the longevity of the Japanese big businesses using dataon 1,273 listed firms in the first section of Tokyo Stock Exchange. The result
indicates that the longevity of the Japanese big businesses may go beyond acentury on average, and the longevity had increased gradually in the post-WWIIperiod. These findings suggest that the Japanese big businesses are stable. Thispaper also explores the relationship between this stability and the Japanese
corporate systems.
Keyword: Longevity, Japanese big businesses, corporate systems

Survival is one of the most substantial goals fororganization had a concern for self-maintenancethe Japanese big businesses. For one thing,(chap. 1, especially pp. 15-22). Problems related topresidents of Japanese firms are frequently quoted

the survival of firms are also mentioned in Barnard

talking about the company’s aim for survival (see,(1938) and Simon (1947)

for example, Nihon Keizai Shinbun, 2002, January

Moreover,somepopulation

ecologyand5), and many refer to survival purposes in their casesstrategic management studies have investigated theof mergers (Shimizu, 2001).

effects of firm behavior on survival (Hannan &Besides, survival has been repeatedly credited

Freeman, 1989; Suarez & Utterback, 1995).

of its importance in classical management studies.

Nevertheless, not much empirical study exists

For example, Drucker (1954) suggested that survival

on the time period of survival with the Japanese big

is of importance for firms, especially for the big

businesses, that is, longevity of the Japanese bigbusinesses. Selznick (1957) also pointed out that anbusinesses.

NikkeiBusiness(1984)

conducts
39

Shimizu
something close to longevity analysis of theResearch Design

Japanese big businesses, however, its analyticDatamethod is not quite dependable (Shimizu, 2001).

We conducted our statistical analysis on a set ofThus, this paper will study the Japanese big

1,273 firms that were listed in the first section ofbusinesses on their length and aspects of longevity,

TSE from 1949, when TSE was established, to 1998.

and furthermore, will investigate how these length

Since there are some institutional differences

and aspects of longevity are reflected in corporate

between the pre-WWII and post-WWII security

management. First, we will discuss how we measuremarkets, we have omitted the 485 firms that werethe longevity of the Japanese big businesses.

already listed at the time of the establishment of TSE
in 1949 (see Shimizu, 2001, for detail on the data

Measurement of the Longevity

set).
We divided the reasons of delisting into five

To conduct our research, we have to consider how

categories: bankruptcy, having been absorbed by

we measure longevity first.
In this paper, we concentrate on the Japanese

another firm, the application of delisting criteria,big businesses. As for the “Japanese big businesses,”reassignment to the second section, and others. Tablefirms listed in Tokyo Stock Exchange (TSE),

1 gives details on the composition of the sample.

especially ones listed in the first section of TSE, has

The primary sources of our data are Soritsu 40

commonly been sampled (Odagiri, 1992, Sheard,

Shunen Kinen Tokyo Shoken Torihikijo Shiryoshu [401994). Thus we will use the listed firms in the first

Year History of the Tokyo Stock Exchange], Soritsu

section as our sample.

30 Shunen Kinen Tokyo Shoken Torihikijo Shiryoshu

Generally speaking, a firm in the first section is[30 Year History of the Tokyo Stock Exchange],

recognized as an important and outstanding firm. ToTokyo Shoken Torihikijo 20 nen-shi [20 Year History

put it the other way round, delisting from the firstof the Tokyo Stock Exchange], Tokyo Shoken

section may indicate the downfall of the delisted
Table 1. Composition of the Data Set

firm, even if the firm does not go bankruptcy.
Accordingly, it seems reasonable to think that theduration for which firms are listed in the first section

Total Number of Firms

1,273

Firms Listed by 1999

1,107

Number of Firms Delistedof TSE (hereafter, the listed duration) indicates akind of “vitality,” that is, something related to theirlongevity.
Because of this, we will use the listed duration
as the surrogate of firm longevity.
40

166

Bankruptcy

47

Absorbed

48

Application of Delisting Criteria

21

Reassignment to the 2nd Section

47

Others3

The Longevity of the Japanese Big Businesses
Torihikijo 10 nen-shi [10 Year History of the Tokyo

ResultStock Exchange]. The secondary sources are Shoken

First, we investigated the listed duration of theTorihiki Nenpo [The Annual Securities Statistics],

overall population of our observations. Figure 1

formerly Tosho Tokei Nenpo [The Annual Statistics

presents the Kaplan-Meier estimate of the listed

Report of the Tokyo Stock Exchange], andduration. The figure shows that the curve falls gently,

Daiyamondo Kaisha-Yoran [Diamonds’ Corporateand approximately 20 percent of the firms had been

Directory].

delisted within the 45 year period.
However, this curve is truncated on the right

Statistical Method

because our observation period was relatively short

We made our analysis using event history analysis.

compared to the listed durations of our samples. We

We first performed nonparametric and parametric

therefore used Weibull distribution, commonly used

estimations of the pattern of the listed durationin event history analysis, to analyze the duration and(Blossfeld, Hamerle, & Mayer, 1989). Next we

calculated the mean and the median listed duration.

analyzed the effect of changes in the times using

The results are shown in Table 2. This table indicatesCox regression model (Cox & Oakes, 1984).

that both the mean and the median listed duration
may exceed a hundred years.

For further details on these statistical methods,
see, for example, Kalbfleish and Prentice (1980),

Moreover, the results shown in Table 2 indicate

Cox and Oakes (1984), and Blossfeld, Hamerle, andanother characteristic of the listed duration. TheMayer (1989).

scale parameter estimate, which denotes the shape ofthe distribution, is approximately 1. This result

Figure 1. Kaplan-Meier Plot of the Listed Duration
Table 2. Weibull Regression Model
Variables
Intercept1.8

Coef.
5.38***(0.17)

Scale.6

1.10(0.08)

Mean duration oflisting (year)
Median duration oflisting (year)
Log likelihood.4.200102030

40

5060

Listed Years

41228.28
145.22–634.88

note: †p<0.1, *p<0.05, **p<0.01, ***p<0.001.
Standard errors are in parentheses.

Shimizu
Table 3. Cox Regression Model for the Effects of the Times
All Delistings
Coef.
Hazard Ratio
4.47***
87.04(0.62)
2.31***
10.07(0.65)
3.64***
38.27(0.56)
3.01***
20.34(0.57)
1.83*
6.25(0.59)
0.93
2.54(0.64)
0.29
1.34(0.66)
0.03
1.03(0.66)
1.32*
3.76(0.56)
0.78
2.19(0.18)
252.44

Variables
1949-54
1955-59
1960-64
1965-69
1970-74
1975-79
1980-84
1990-94
1995-98
Recession Period
Log Likelihood
Testd. f.
†

*37
**

Bankrupt and Absorbed
Coef.
Hazard Ratio
3.90***
49.18(0.69)
2.32***
10.18(0.70)
2.53***
12.61(0.62)
2.43***
11.36(0.61)
1.22†
3.41(0.62)-0.14
0.87(0.88)-0.25
0.78(0.78)
0.10
1.10(0.66)
1.32*
3.76(0.56)
0.14
1.15(0.25)
131.1837***

Notes: p<0.1, p<0.05, p<0.01, p<0.001. Standard errors are in parentheses. All variables aredummy variables. We added category of business dummies (27 variables) as control variables, theresult of which we do not show for abbreviation.

suggests that the (instantaneous) rate of delisting atdurations of firms. To consider this issue, we divided

any moment is nearly independent of the listed years.

our observation period into ten periods: 1949-54,

To put it another way, the result is not consistent

1955-59, 1960-64, 1965-69, 1970-74, 1975-79,

with the “liability of newness” hypothesis, which

1980-84, 1985-89, 1990-94, and 1995-98. Then, we

have been argued by researchers in organizational

included these ten periods as dummy variables

ecology (e.g., Hannan & Freeman, 1989).

(except for the period 1985-89).
The column titled “All Delistings” of Table 3

Finding 1: The average (mean and median) listed
duration may go beyond a century.
Finding 2: The rate of delisting is nearly constant.

shows the result. It indicates that the listed duration
extended gradually until the early 1980s, and thenremained steady from the 1980-84 period to theSecond, we also investigated the effects of

1990-94 period. However, there is also somechanges in the times. It seems reasonable to suppose

fluctuation. The result shows that in the periodthat the times, to some extent, would affect the listed

1949-54 firms have a very high delisting rate, that is,
42

The Longevity of the Japanese Big Businesses
a very short listed duration, and the delisting rate

only a part of a firm’s life span, is longer than thedecreased during 1955-64. In the period 1960-64, thelife span of small firms.

rate increased slightly and then decreased gradually

Judging from evidence about the life span ofin the following periods until the 1980s. Moreover,small firms in Japan and in the U.S., it seems

the delisting rate has increased in the latter half ofreasonable to suppose that the average life span of

1990s. The rate of delisting in 1995-98 is lower thanthese firms runs from several years to ten years. Thethe rate in 1970-74.

White Paper on Small and Medium Enterprises in

However, these results might have been

Japan (1999) reported on the ability of Japanese

influenced by institutional change in 1961 (thesmall firms to survive, and showed that the medianestablishment of the second section of TSE).

survival time of business establishments (places ofTherefore, we concentrated on the cases involvingbusiness) is approximately five years to eight years.

bankruptcy and absorption. The result of thisAlso, calculating from Takase’s (1988) data on theanalysis is shown in the column titled “Bankrupt andbusiness establishments in two industries in aAbsorbed” of Table 3. This result indicates a similar

particular prefecture, the median survival times intrend for the most part to the “All Delisting” case.

these industries are 2.2 and 3.6 years respectively.

However, the rates in 1975-79, 1980-84, 1990-94 are

Moreover, Carroll (1984) surveyed and reanalyzed

approximately equal to the rate in 1985-89.

52 data sets of previous studies on organizational

Furthermore, the rate in 1995-98 is about the same asmortality. Calculating from the results of histhe rate in 1970-74.

reanalysis, the median survival times of these data
sets range from 1.1 to 12.0 years. Therefore, we canFinding 3: The listed durations of firms increased
gradually, and then remained steady from 1949-54
to 1991-94, however there was some fluctuation.
Finding 4: In the latter half of the 1990s there has
been a high rate of delisting, compared to 1980s
and the first half of 1990s.

conclude that the life span of the Japanese big
businesses is longer than that of small firms, orrather, the Japanese big businesses are more stable
than small businesses.
This result is consistent with several researches

Discussion

on the Japanese corporate systems, which suggest

In this section, we consider the implications of ourthat the survival of firms is especially valid for thefindings.

Japanese big businesses because of their lifetime

Finding 1 implies that the Japanese big

employment system (Odagiri, 1992; Sheard, 1994).

businesses have considerably longer life spans than

Sheard (1994) pointed out that “to the extent that

small firms in Japan and in the U.S., since the listed

employees of the large Japanese firm expect to enjoy

duration of the Japanese big businesses, which isa long-term association with the firm, they must
43Shimizu
entertain the notion that the firm will be in a position

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