Friday, August 10, 2012

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).

1 comment:

  1. Have any studies been done correlating longevity and stock price? I ask because my guess is that stock price (and the current corporate drive to keep them high) has absolutely nothing to do with making a company successful (and thus have longevity). I see the focus on stock price by upper management to be detrimental to company longevity, but I haven't really been able to find any data to back up this gut feeling. I have noticed that all of the over-100 years old companies that I have checked are all private, and thus don't have stock prices, but my sample size is extremely small, so I don't know how well that plays out.

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