Family-Owned Businesses in Japan

Tyler Cowen highlights a forthcoming paper (previous working paper version here) about family-owned businesses, marriage, and adoption in Japan. The Economist has a summary here, though notes that the research is a decade old (circa 2000) so it's unknown whether the trend still holds. In Japan, it is common practice for men in their 20s and 30s to be adopted and for marriages to be arranged with a business purpose in mind--the relationships are formed so that these men come in to the family to carry on the family-owned business. This paper documents that this practice improves the competitiveness of family-owned businesses, and helps explain why so many large, established companies in Japan are family-owned (whereas in most other developed economies they are not). It's unclear to me how much of this is substitute behavior for selling or otherwise turning over business ownership outside of the family. Perhaps there is a greater desire to maintain "family" control over businesses in Japan relative to other established economies.

Comments

[Eric]

I too now understand why there are so many family owned businesses in Japan, thanks to your post Jared. Thanks for the information, always good to learn something new and interesting.