Japan has many of the oldest family businesses in the world. Although many of these are small hotels (or ryokan) and brewers of sake, there are other bigger names more familiar in the west such as Suzuki, Suntory and Nintendo which are more than 100 years old.
The frequently cited reason for the longevity of family businesses in Japan is the practice of adult adoption. In Japan it’s called mukoyōshi.
Adult adoption mostly happens when there is no male heir in the family available to take over the business, but there is an unwed daughter of a suitable age to marry. Although it's less of an issue than in the 20th century, Japan still practices primogeniture, with the eldest male heir normally inheriting the entire business.
If the eldest child is a daughter, she often married a mukoyōshi, a man chosen especially for his ability to run the family firm. The adopted male will assume the family name, ensuring the continuation of the business. Mukoyōshi is also practiced even when there is a male heir to run the family business, but is deemed incapable of doing so. And this is where it has been especially good at bringing in new talent.
Perhaps the best-known mukoyōshi is at the auto-maker Suzuki. The current chairman and CEO Osamu Suzuki is the fourth adopted son in a row to run the company. He’s now 84, so maybe it’s about time a new mukoyōshi comes in to run the multi-billion dollar business.
Of course, few western family businesses are unlikely to practice mukoyōshi in its purest sense - marrying off their daughters to talented male bosses probably wouldn't fly in 21st century Britain or Germany. But the concept could work when there is no marriage requirement.
Couldn’t a talented professional manager in his 20 or 30s be adopted into the family to be the potential heir to run the business? In Japan, there is evidence that the mere possibility of adult adoption makes the male heir of a family business raise his game.
This could help deal with the problem beset by the next generation of so many family businesses – their sense of entitlement to work in the family business among the incoming generation.
The practice could certainly help with making sure merit plays a bigger role in deciding senior roles at the business - as it has indeed done in Japan. And this could only be a good thing.