One of the things that makes America unique is its economic power. Since the late 19th century, the United States has had the strongest economy in the world, peaking in the 1950s when it produced roughly half of the world’s economic output.
But in the long view of history, that economic empire and the businesses responsible for it are fairly short-lived. Taking a look back, we can find companies — still in existence today — that have the kind of longevity that even the largest companies in the world would be jealous of. And the way those companies have lasted so long is unusual to say the least.
Young And Old
If you come from the United States or another relatively young country, you’re bound to have a different understanding of the term “old” when comparing to other countries and cultures. America is an infant compared to countries like France, or, even older, Egypt, the latter of which containing monuments that were built thousands of years ago.
Along with those long-lived governments and ancient monuments, there are some countries that boast of having impressively old institutions still in existence. For example, England’s Oxford University was established in 1096 CE, 922 years ago. The institution was started before and outlasted the Aztec, Mongol, and Ottoman Empires.
Among the Oldest
But Japan, one of the oldest countries in the world, boasts of having an unusually high number of institutions than most others. Founded in 660 BCE, it’s not as old as China, founded in the Bronze Age, or Ethiopia, founded in the 2nd millennium BCE. But, unlike Japan, neither of those countries can boast of having a high number of businesses that have been in operation for centuries.
World’s Oldest Business
In fact, Japan is home to the oldest running hotel in the world. Nisiyama Onsen Keiunkan is also the world’s longest lasting business still in existence. Founded in 705 CE, the inn’s primary attraction has always been its onsen, a hot bath with water provided by the Hakuho Springs nearby. The hotel has been in continuous operation for the last 1,300 years.
Surprisingly, it’s just a bit older than another ancient and continuously operated hot-spring hotel, Hoshi Ryokan, which was founded in 718. But beyond just being home to the world’s two oldest hotels, Japan is the home to a large number of ancient businesses.
There are a number of truly old companies still in operation across Europe. There are a handful of ancient pubs and wineries in Austria, Germany, Ireland, the UK and France started before 1000. But when you look to Japan, the sheer number of businesses that have lasted for centuries makes the Land of the Rising Son a true standout.
Plenty Of Company
Among them are Sudo Honke, a sake brewer founded in 1141, Yamanashi Prefecture Company, which has been making clothing for monks and items for Buddhist altars since 1024, and Ichimojiya Wasuke, a confectionary company founded in 1000. In total, there are more than a dozen Japanese companies still in operation that began before the year 1200.
Of course, there has to be a reason for the Japanese companies’ early starts and exceptional longevity. Ultimately, it comes down to a few unique factors of Japanese history and culture. First, Japan was one of the first places in the world to develop a strong agricultural economy “with rather sophisticated urban populations” said Hugh Patrick, director of the Center on Japanese Economy and Business at Columbia University.
That early agricultural wealth and the semi-elite city dwellers that came with the early urbanization provided a strong consumer base long before the industrial revolution that would begin centuries later in the Western world. But that only shows why the companies began early on.
One of the main reasons some of those companies were able to last so long is the Japanese tradition of “primogeniture.” It’s a big word that essentially means that the firstborn son of a family inherits everything when the parents die. In Japan, that meant entire companies would be passed on entirely to a single member of the family…
Because those companies were always kept within the family, they had a different mindset than companies run by people only brought together by business interests. Where most companies — now and in the past — concern themselves with making profits in the moment, when your business is inherited from your father and is to be passed down to your son, your primary concerns are loyalty and longevity.
Preservation Over Profit
“The logic of doing business in Japan is a logic of commitment rather than a logic of choice,” said Hugh Whittaker of the University of Oxford’s Nissan Institute of Japanese studies. Rather than obsessing over quarterly reports, “family-owned enterprises are always going to have a lot more persistence,” he added.
Despite the fact that the tradition of primogeniture had all but completely faded away in Japanese culture during the 20th century, it continued and evolved when it came to family owned businesses.
‘Adopting’ New Ways
Rather than simply passing the company on to the first-born son, Japanese business owners often turned to adult adoption. The head of the company would legally adopt a would-be heir to the company. That adoption was sometimes facilitated by a marriage between that heir and the owner’s daughter.
Loyalty Plus Capability
This practice of adult adoption not only maintained the loyalty to the business that comes from the family connection, it also allowed these businesses to put truly talented people in the right position to run things when the time came. In modern times, the practice of adult adoption has become incredibly common in Japan.
In 2011, for example, more than 90 percent of the over 80,000 adoptions that took place in Japan were of adults. And as unusual as the practice may seem, the results of maintaining family businesses in this way speak for themselves.
Research shows that family owned businesses run by adopted heirs outperform those run by “blood” heirs, though both adopted and blood inherited companies outperform non-family run companies.
Unique Business Climate
Literally adding “new blood” into an old family business lets Japan’s ancient companies continue to evolve over time while still staying true to tradition. As a result, most of Japan’s oldest companies have been family owned for their entire existence.
Perhaps the most globally famous example is Nintendo. The company started out making playing cards in the 1800s. And in the nearly 130 years since its founding has become one of the world’s largest video game companies, as well as Japan’s third most-valuable company, all while remaining a family-owned company.
Day By Day By Day…
But it’s still a flash in the pan compared to Nishiyama Onsen Keiunkan. If you were to stay in one of the hotel’s 35 rooms today, it would be under the care of the 52nd generation of family owners in a company that’s lasted nearly three times as long as the Roman Empire.