What Is Unique About Old Companies?

My research partner in Japan, Makoto Kanda, recently completed a study of over 1,000 companies to test our theoretical framework regarding the behaviors of old companies that have enabled them to survive for over 100 years.  By comparing the survey results from 'young' companies with those from companies founded before 1911, he came up with several statistically significant items which indicate we are on the right track with our hypothesis regarding longevity factors.  Here are a few of the results:
* Old companies scored significantly higher in every aspect of developing future leaders and succession planning
* Old companies put much more emphasis on their relationships with suppliers, customers, and local communities
* As might be expected, the old companies focused much more on tradition and improving what they see as their core strengths; when large-scale change is necessary, they admit to taking a long time to plan and implement such change
* The old companies have conservative financial practices (emphasize profitability over sales volume; are reluctant to borrow money)

The complete results have been published in the IMDA book "Global Competitiveness in a Time of Economic Uncertainty and Social Change: Current Issues and Future Expectations" (ISBN: 1-888624-11-6).

A Theoretical Framework for Corporate Longevity

Makoto Kanda, my research colleague in Japan, has completed his research of shinise (revered Japanese companies that have remained in business for a very long time).  The first phase of his research was to conduct in-depth interviews in 17 companies out of which he built a theoretical framework describing common factors observed in these companies that have survived well over 100 years.  He then developed a survey to test the five factors identified in this theoretical framework.  It is this survey that we are using both in Japan and in the United States to test our hypothesis: In Japan he is comparing survey results of shinise and non-shinise to see where there is a significant difference on these factors; then we will compare results of 100-year-old U.S. companies to those of Japanese shinise.  Since we are now ready to begin reporting some of our results, I thought we should start with an explanation of the five factors that form the theoretical framework we are testing.

Our hypothesis is that there are five factors which together result in unique corporate behaviors leading to longevity.  These factors are:
1.  Building corporate identity through careful management of organizational culture
2.  Protecting core/unique strengths through a balance of maintaining tradition and continuous improvement and innovation
3.  Strong relationships with business partners (customers and suppliers)
4.  Investments in developing employees, with a particular emphasis on leadership succession
5.  Strong relationships with the local community

Future postings will explain the results of our research: check back to discover what behaviors are unique to long-lived firms!

Surveys of 100-Year-Old Companies Beginning

Now that I have returned from a semester teaching in England I am re-starting my research on 100-year-old U.S. companies.  (I was interviewed last month by the BBC for an article on corporate longevity.) My student researchers and I are starting with small to medium sized companies, only because I suspect it will be easier to contact a person within the firm who is willing to work with us on completing our survey.  The survey itself has been developed by my Japanese colleague, Makoto Kanda, who has used the instrument to gather information on behaviors and strategies of old Japanese companies.  Once we obtain enough information on U.S. companies, we are planning to do a comparative analysis.  If you work for a 100-year-old company or know of someone who does, please email me at tenhaken@hope.edu. The survey only takes a few minutes to complete and all individual company information will be completely confidential.  I look forward to posting the results of this research in the future - it will all be in consolidated form, with individual companies identified only with prior permission. We hope to work with many interesting old companies to discover their 'secrets' to living a long life!