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JAPANESE COMPANY SUCCESS FACTORS – CULTURE AND LEADERSHIPMINDSET FOR ORGANIZATIONAL SUSTAINABILITY IN DIFFICULT ECONOMIC
AND SOCIAL CLIMATES
Toru TAKAHASHIa*, Kurtz LAWb, Claudiu CICEAc
a,b,c

Bucharest University of Economic Studies, Romania

DOI: 10.24818/IMC/2020/02.20

ABSTRACT
Studies have shown that Japan has the most significant number of existing companies with histories
over 200 years. Additionally, many of the companies with 100-year histories are Small and Medium
sized Enterprises (SMEs). This research explores the features of long-lived companies and compareswith the studies of Takubo and Goto to examine whether historical-critical success factors may havefuture implications on global organizational sustainability. This paper explores how these factors
support sustainable growth based on the commitment to continuous innovation, and identify coreelements of sustainability for organizations to endure market shifts and times of uncertainty.
KEYWORDS: longevity, enduring companies, sustainability, transformation, Japan.

1. INTRODUCTION
Established by the laws of the Tokugawa government in 1634 and continuing for approximately 200
years, Japan entered into a period of relative isolationism with European countries. Japanese wereprohibited from going abroad and foreign vessels were closely watched and reported. Nonetheless,there is evidence of 3,183 businesses that were established between 1603-1868 which are still existingand operating today (Nippon, 2018). With increasing Western intrusion into Japanese waters in the
19th century, culminating in Commodore Perry’s threat of war, forced the Japanese to negotiate atreaty with the United States in 1854 (Howell, 2008) effectively ending isolationism with the West.
From 1868-1869, a civil war ensued culminating in the establishment of the Meiji government (18681915) bringing European customs and practices to Japan and stimulating a nationwide change in theconcept of class-boundaries with a greater emphasis on the social acceptance relating to thesignificance of money-making (Sumikawa, 1999). Until 1868, the merchant class had been known as
the chonin, which was recognized as the lowest class in the social structure. Indeed, the merchantclass had been associated with a negative stigma (Horie, 1936). Arguments have been made to suggestthat the chonin were the main instigators of industrialization in Japan (Yamamura, 1969). Nonetheless,the Meiji government sought to improve social infrastructure such as railways, shipping andcommunication (Sumikawa, 1999), as well as investing highly into acquiring Western technology
and expertise (Brown, 2005). Since 1868, 28,972 firms had been established representing 88.5% ofcompanies in Japan with histories of at least 100 years. Later landmark events which highly impacted
the Japanese economy and brought both disruption and economic depression relate to the aftermathof World War 2 and the effects of two nuclear bombs. Japan’s human loss represented 1.2 million,
approximately 4% of Japan’s pre-war population (Kesternich, et al., 2012). In addition, Harrison(1998) suggests that in 1945, Japan suffered from deprivation of imports. More modern circumstances
include the subprime loan crisis*

Corresponding author. E-mail address: t-takahashi@globis.co.jp454

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known as the Lehman Shock in Japan and shifts in market demand brought about by technologicaladvancements.
The question therefore exists as to what makes Japanese companies unique that they can survive
crises such as economic depression, revolution, nationwide changes in identity and social practices.
This article will address these aspects and determine whether these past success factors are still valid
in today’s period of modernization.
In addition, in determining whether the success factors of Japanese firms in the past are applicable tothe present and the future, this article explore whether there are similarities with the success factorsof long-lived firms other than Japanese firms.
2. LITERATURE REVIEW
There are many factors which can guarantee the success of companies on the market. Among them
we can mention general government expenditures or education level of population (Cicea et al., 2019),
organizational resources (Kotas, 2015), managerial competencies or organizational culture (Raisiene,2016).
Regarding the Japanese environment, Takubo (2014) reported that a Japanese construction company
founded in 578AD named Kongo-gumi, is the world’s oldest company. The 69 companies researchedin his study, had more than 300 years lifespan and annual sales of at least five billion Japanese yen.
The research focused on three changes that companies face in looking at the secret to longevity:changing times, changing generations, and changing business. For each of these changes, the common
phenomena observed in Japanese long-lived companies are concerned with management knowing
their limits for continuity in both peacetime and emergency, connecting the values that support
sustainable companies, and delivering customer value in line with core capabilities and values. These
attributes are not solely the domain of Japanese companies for example, De Geus (1997) wrote that
corporations often fail because management focuses too much on producing goods and services thanstaying alive. Tapies and Fernandez (2010) identified that family unity, innovation and the capacity
for sacrifice in Spanish companies had most impact on a company’s longevity and Jaramillo, et al.,(2018) determined that value variation between business sectors, customers and supplier client
relationships have a high impact on sustainability.
Furthermore, Takubo identified three elements necessary for consideration. Firstly, that management
must know its own limitations and are subdivided into management style, capital and finance, andgovernance. Secondly, connecting values are subdivided into the president, employees, successors,and external stakeholders. Thirdly, customer value is subdivided into core capabilities, organizational
capabilities, and customer value. Goto (2009) supports Takubo and further identifies four trends inJapanese enduring companies. These relate to the accumulation of management systems as internal
factors of the company, long term expansion of the market economy as external factors ofmanagement and the existence of a strong will to continue and develop family businesses. Finally,
the existence of an ideological factor to persist family businesses is important to understanding
fundamental qualities of long-lived companies. In particular, the last point touches on the role played
by Baigan Ishida (1685-1744) who introduced the concept of shingaku which legitimized putting
customer satisfaction ahead of profit (Bevacqua 2005).
Takubo (2014) also suggests that the three common elements underpinning the management of aJapanese sustainable company are coexistence with the community, making use of rituals andfestivals in management, and developing employees through organizational learning. Both Takubo
and Goto seem to acknowledge the importance of spiritual pillars and the importance of constantly
educating employees to adapt to change.

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3. RESEARCH OBJECTIVESThis research examines the 18 Henokiens (2020) case studies written by a variety of professionals
and academics on the subject of global companies which have survived for more than 200 years.
Considering that the average lifespan of companies on the S&P 500 is approximately 33 years, it isinteresting to consider why and how these other companies have survived for significantly longer(Anthony, et al., 2018). Also, the question arises as to what degree survivability is a factor of success.
Where lies corporate responsibility in the long-term, for example to stakeholders or to shareholders?
This research study seeks to verify or contribute to the validation of the findings of Takubo and Goto.
4. RESEARCH METHODOLOGY
In this study, data analysis was conducted in the following steps: The Henokiens case studies wereindividually examined and key phrases were collected. The researchers read and comprehended thedata and meaningful words, phrases and concepts were logged and coded. Codes were grouped into
categories and categories were grouped into themes. Finally, thematic descriptions were developed
to explain the companies’ success factors relating to their longevity. Themes had several categories
such as shown in figure 1.

Figure 1. Illustration of the Sub-categories, Categories and Themes
Source: Author’s own conception
In qualitative research, meanings are derived from words and images not numbers. Since words andimages may have multiple meanings, it is necessary to explore and clarify them. This means that thequality of the research depends on the interaction between data collection and data analysis to allow
meanings to be explored and clarified (Saunders, Lewis & Thornhill, 2016). Fielding (2008)
suggested that qualitative data analysis involves the comparison between what is said about
experiences and behaviors. Subsequently, the raw data codes were organized into conceptual
categories and themes emerged from them. Neuman (2007) states that coding is two simultaneous
activities consisting of data reduction and analytic data categorization.

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The Henokiens case studies were selected as a comparison with Takubo and Goto due to thesimilarities of family businesses and 200+ year lifespans. Figure 2 shows the ongoing lifespan of thecompanies examined through the thematic coding process.

Figure 2. Lifespan of Companies analyzed from the Henokiens Case Studies
Source: Author’s own conception
5. FINDINGS & DISCUSSION
Bennedsen and Henry (2015) summarized their research of companies in the Henokiens associationin Europe, under the theme of building centenary family businesses. They discovered that manyfamily businesses had persisted for more than a century, but in addition started their lives with uniquefoundations and beginnings unlike typical models found in textbooks. For example, Schwarze
GmbH&Co.KG, an international firm specializing in alcoholic beverages, originally began byproducing cereal liquor for local farmers. These villagers drank the spirit before working in the fields
and believed that intaking corn each day prevented illness. This was the start of the long-lived
company.
Bennedsen and Henry further explain that these businesses succeeded because the families who
managed them advocated long-term planning. Additionally, as can be seen in the case of Garbelloto
S.p.A, a synergy between production quality, a synthesis with the local environment and centuries of
tradition has enabled them to create a key competitive and sustainable advantage.
These can be summarized by the importance to build and establishing close relationships with local
key partners. Inherit tradition and culture from one generation of owner to the next. Resonate thefounder’s values with the companies’ employees, customers and other stakeholders.
During the Covid-19 pandemic, while international and interregional migration has been restricted,
the sense of micro-tourism is rapidly spreading in Japan. This includes the idea of enjoying microtourism within a region. The question of how well companies are accepted by the communities they457

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belong to may be an indicator of longevity in times of crisis. Micro-tourism relates to an overnight or
day trip to a local or nearby location within two hours from home. Although the population size ofsome areas within the micro-tourism area is small, the market size is not necessarily small as there
exists a high potential for repeat visitors. Having a mechanism to encourage repeat customers makes
the market sustainable and stable (Liu-Thompkins & Tam, 2013; Asgarpour et al., 2013; Leninkumar,2017).
Mellerio, a 400-year-old jewellery firm in the heart of Paris, told the story of how Marie-Antoinette
came to buy her accessories from the family firm and also gave a fascinating account of how one ofher ancestors Jean-Francois Mellerio won over Queen Isabella of Spain with his jewellery collectionin 1860, thus becoming a supplier to the royal family (Bennedsen and Henry, 2015). Similarly,
Japanese sustainable companies have many anecdotes to tell in their history. Both inside and outside
the company, there are stories of the predecessors' successes that have made the company what it istoday. These include stories of hardships such as launching a new business, negotiations with difficult
customers, and help from business partners. These anecdotes are more than just memories. They arestories of the company's unique way of working, actions based on its values, and the successes andsometimes failures that resulted from those actions, and they are passed on to future generations (Sole& Wilson, 2002).
According to Takubo's research, there is no significant difference in the basic values expressed in thewords of Japanese sustainable companies and good companies in general. What is different, however,is that in Japanese sustainable companies, the decisions made by the president, the behaviour of
employees, and the actual actions of employees are based on their values and are "thoroughly
implemented”. These actions, which have been built up over many years, appear to be something thatcannot be imitated by other companies. Recurring crises don't always happen in the same way every
time, but where is the nature of the crisis? It is easy to imagine that if you tell the story of how you
thought about the crisis, and then practice it thoroughly on a regular basis, you can easily foster crisis
response skills. As a result, such companies will continue to increase their ability to survive.
Ideally, for the survival of a company, the shareholders should play a role in watching over thecontinuous succession of the business, the founding family should play a role in protecting thephilosophy and values of the company, and the management should play a role in adapting to thechanging times. With these three elements in one place and in the sense that they are easy to control,
it seems clear that family businesses have impact on longevity.
However, it cannot be confirmed that a family business will always expect longevity. When a longlived company goes through crisis, shareholders, founders and management must function properly.
Management must be able to make an appropriate effort to change the company in the course of thetimes. Subsequently, communication between parties is important.
6. CONCLUSION
Our intention was to verify or contribute to the validation of the findings of Takubo and Goto. Our
research also provides an integral discussion regarding Japanese and European companies on theissues of long-term sustainability as we believe that the outcomes could bring general-purpose effects.
In particular we found that some of the key commonalities were: generational family-run business,placing customer value above profitability and a sense of sacrifice in the face of unnecessary
expansion or as a means of surviving difficult times. In addition, Japanese companies place heavyemphasis on passing down ancient traditions to the next generation while placing value on modern
adaptability, as well as success stories were areas of contrast.
Future research will be conducted using interviews for some enduring companies and collecting data
and facts to discover how companies feel about whether they can increase sustainability by learning
about Japan’s long-lived companies. Also, we will further investigate whether the similarities arecommon on a global scale. Specifically, we want to unravel the common factors which contribute to458

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the output of corporate activities, rather than just longer living. Further studies will answer thequestions regarding key success factors for long-lived companies which continue to work in an
increasingly complex and chaotic macro environment. Alternatively, unravelling what new factors
might be needed will have meaningful conclusions for industry and other organizations.
Our research centered on a thematic coding analysis of 18 Henokiens case studies. The outcomes
were then compared with the findings of Takubo’s and Goto’s researches. Potentially, an examinationof other case studies outside of the Henokiens group could have yielded different findings. This
research focused on a qualitative analysis which relied upon subjective interpretation based on
observation and explanation and then formed into concepts, hypotheses and abstractions.
Additionally, both Takubo’s and Goto’s researches were translated from the original Japanese
language, and potentially, some interpretation could have been lost during this process.
Acknowledgement
This study was conducted as part of a doctoral program at the Bucharest University of Economic
Studies.
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