How Japan’s Oldest Companies Navigate Uncertainty

In 1945, an air raid destroyed the main Tokyo factory of Toraya, a leading Japanese confectioner since the 16th century. Despite the ongoing world war, the company began rebuilding almost immediately; later, even when sugar became scarce and Japan’s future uncertain, it kept operating, experimenting, pressing on. The logic was simple: Toraya existed to make sweets and would continue to do so no matter what was happening around it. Today, with three factories and some 80 stores across Japan as well as a boutique in Paris, it still does.

How does a company like Toraya survive and thrive through centuries of political, social, and economic change? And what can today’s organizations — facing rising manmade and natural disasters, escalating trade conflicts and AI disruption — learn from them? In an era when the average tenure for companies in the S&P 500 has fallen from about 33 years in the mid-1960s to roughly 21 by 2020, with consultants forecasting a further drop to 15-20 by the end of this decade, these are important questions to ask and answer.

To do so, we decided to compare the results of 59 large, listed Japanese family firms with non-family firms in Japan and with large family and non-family firms in the United States, Germany, and Canada from 1994 to 2024, as well as to interview the leaders of three of the oldest Japanese companies: Toraya, the weaver Hosoo, and the tea-caddy maker Kaikado. Our focus on Japan stemmed from the fact that, among developed economies, it not only boasts centuries-old organizations but has also faced the harshest conditions over the past three decades, with prices falling or flat in 15 of the 30 years, its over-65 population roughly doubling, and its GDP shrinking by roughly a fifth in dollar terms while the U.S. economy quadrupled over the same period.

Interestingly, however, once we controlled for national economic climate, Japan’s large family firms matched the return on assets (ROA) of their U.S. counterparts, while outperforming those in Germany and Canada. The Japanese companies gained ground over time; from 2014 to 2024, even their absolute ROA matched that of the U.S. companies we studied. And, across the full three decades, their ROA swung about half as much as their U.S. peers. In sum, the Japanese companies we studied earned almost the same as or more than their foreign peers while risking far less under conditions that were far worse.

Philosophy, Perspective, and Discipline

Our opening story points to the methods by which these companies navigated both the past three decades and the preceding decades and centuries.

What guided them was not forecasts but architecture: a settled understanding of what their firm was for, what could change, and what could not. One veteran family-business advisor described this as “moving from rule by family to rule by philosophy.”

The leaders of these firms also take a distinctive view of time. As a board member for several Japanese companies put it, “From a family’s perspective, a three-to-four-year or a ten-year management period is seen only as one small segment of a hundred-year history…. What looks illogical from the outside may, when viewed on that horizon, actually prove rational.”

We found that the most resilient firms also express their purpose-led philosophy and ultra-long-term perspective with four disciplines.

They turn values into operating systems.

At Hosoo, the Kyoto weaving house founded in 1688, “beauty is the highest priority” is not a slogan but a selection rule governing which technologies the firm adopts and which collaborations it accepts. Otsuka Holdings embeds its corporate philosophy in governance and management systems: it uses it in selecting directors and developing next-generation managers, links executive remuneration to medium- and long-term value creation, and reinforces those expectations through group-wide ethics training and speak-up mechanisms across the group.

They use tradition as a launchpad for evolution.

Toraya’s 18th-generation president holds that nothing is forbidden to change, provided the firm keeps fulfilling its essential role as a confectioner. And it has changed constantly: Toraya opened a Paris boutique in 1980, where it developed sweets incorporating local ingredients such as figs and berries; and in 2021 it opened a restaurant in partnership with the owner-chef of a three-Michelin-starred Paris restaurant—all while still making sweets from design books created between the 17th and 20th centuries. Hosoo’s core market collapsed: by 2008, kimono demand had fallen so far that its weaving workshop was down to three craftsmen. Rather than defend what remained, the company engineered a 150-centimeter loom that existed nowhere else and took Nishijin weaving into collaborations with Dior, Gucci, and Louis Vuitton.

They protect patient capital.

Japan’s long-lived family firms are willing to invest for the very long-term if they believe a strategy will eventually pay off and help them execute on their purpose. In the early 1960s, Suntory entered Japan’s brutally competitive beer market, a bet no conventional payback horizon could justify. It sustained the commitment through decades of losses, treating them as tuition for capability and brand, until the beer business turned its first profit 45 years later, powered by the award-winning Premium Malt’s. Patience here is not the absence of discipline; it is discipline over a longer clock, built to compound through conditions no one can time.

This patience is paired with a conservative balance sheet: across our 30-year sample, the Japanese family firms carried the lowest leverage of any group we analyzed across four countries—a median of 16%, versus 29% for their U.S. counterparts—a pattern consistent with greater resilience through repeated shocks. Debt can improve tax efficiency and, under some conditions, lower the cost of capital, but on a hundred-year clock those benefits have to be weighed against the risk that too much debt can become fatal in an unexpected downturn.

They treat succession as stewardship.

These companies often plan not just the next CEO but the “next-next” one and no longer limit themselves to only family members. They build a team around the incoming leader or pair him or her with a trusted, cautious deputy, the bantō, who delivers hard truths in private. “Having chosen the CEO, they are determined to make that person succeed,” one governance practitioner told us. The care taken with succession shows in our data: in Japanese firms, operating performance around leadership changes tends to dip less, and less erratically, than in comparable U.S. ones. “There is love in the system,” one longtime board observer noted.

In our research, we also found an example of Japanese companies that abandoned these disciplines to their detriment. Kongō Gumi, the temple builder founded in 578 and once routinely described as the world’s oldest continuously operating family business, survived 14 centuries of upheaval before borrowing to push into general contracting—condominiums, office buildings, nursing homes—a price-competitive business in which a company that had never competed on price had no advantage. When demand for temple construction collapsed in the late 1990s—the same kind of shock Hosoo survived — the debt could no longer be carried, and the firm lost its independence in 2006. (Its operations live on inside Takamatsu Construction Group.)

Lessons for Other Firms

How much of this is applicable outside the world of Japanese family businesses?

Ownership clearly matters: across all four countries we analyzed, family firms delivered higher returns with lower risk than non-family firms, and certain ownership structures can make it easier to sustain a long horizon by shielding management from short-term market pressure. But our findings point to something more encouraging: all 59 Japanese family firms in our quantitative sample were listed. Ownership is not destiny; the practices matter enormously—and, as Kongō Gumi sadly shows, even a family business operating for more than a thousand years can fail if it abandons them.

Values-based operating systems, strategic evolution grounded in tradition, patient capital backed by a prudent balance sheet, and thoughtful succession planning are all possible under different forms of ownership, all the way from fully private (including family owned, foundation owned, employee owned, 100% ESOP owned, and non-profit owned) to widely held public companies. They are also possible in different geographies.

To cite a few examples:

• Novo Nordisk, the century-old Denmark-based pharmaceutical company, highlights its social and environmental commitments not only in a values statement but in its articles of association, whose objects clause says the company “strives to conduct its activities in a financially, environmentally, and socially responsible way.” Its foundation’s holding company holds 28% of the capital and 77% of the votes.

• At Corning, the U.S.-based manufacturer of advanced glass and ceramics founded in 1851 and still developing innovative new products such as Gorilla Glass for smartphone screens, there is one class of stock, one vote per share, and no member of the founding Houghton family is on the board.

• At Robert Bosch, the 140-year-old German engineering and technology firm, a charitable foundation holds 94% of the share capital while nearly all the voting rights sit with a separate industrial trust; Tata in India and Patagonia in the United States use trusts to the same end.

• While research does confirm that the world’s top family businesses are better at succession planning than the largest public companies in the same sectors, both in terms of process and results, several public companies (such as Mastercard and PepsiCo) are wonderful examples of sound practices.

Regardless of their ownership structures and geography, smart executive teams, boards, long-term investors and fiduciaries should simply keep asking the following questions:

1. Values: Which values actually decide our painful trade-offs and where are they wired into promotion, pay, and oversight?

2. Tradition: What part of our heritage is a platform to build from rather than baggage to discard or a relic to defend?

3. Patient capital: Which long-cycle investments have we protected from quarterly trimming, what milestones will tell us the patience is still justified, and is our leverage prudent in today’s extreme uncertainty and volatility?

4. Succession: How far ahead—beyond emergency replacement charts—are we planning leadership transitions, including the team around the successor?

In 1945, nobody at Toraya knew what the next decade would hold. Today, nobody knows what AI, fragmentation, or the next crisis will do to their industry. The firms we studied never solved that problem; they adopted a philosophy, perspective, and set of disciplines built to help them navigate through uncertainty, and it paid off when conditions were at their worst. At a time when forecasting the future feels impossible, we believe that this is a model more companies should follow.

Copyright 2026 Harvard Business School Publishing Corporation. Distributed by The New York Times Syndicate.

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