Community Ties Lead to Business Longevity

Study examines what other businesses can learn from shinise, long-lived family-owned Japanese businesses that forge deep cultural bonds with their communities.

Community Ties Lead to Business Longevity thumb

Companies that help their communities maintain cultural traditions do more than spread goodwill—they contribute to their own success and longevity. Researchers who studied century-old companies in Kyoto, Japan, discovered that these companies thrive because of the relationships they have forged with local residents.

In Kyoto, these companies, often family-owned, are known as shinise. Citizens view shinise as local institutions and imbue their products with special significance, say Davide Ravasi of the University College London School of Management and Innan Sasaki of the Lancaster University Management School, both in the U.K., and Evelyn Micelotta of the University of New Mexico’s Anderson School of Management in Albuquerque.

The researchers conducted interviews with 56 owners, managers, and employees of Kyoto shinise, as well as 33 representatives from the local community. Family-owned firms in the study represent diverse sectors, from a sake brewer to a timber supplier. The researchers found that these companies were valued not only for their efficiency and profitability, but also for the extent to which they represent local cultural heritage.

“Shinise enjoy a special standing because they are seen not just as producers of exquisite goods, but also as essential to keep the local culture alive,” says Ravasi. “That is why the local government acknowledges and supports them, and their products receive preferential treatment in shops.”

Shinise do face certain challenges. For instance, their elevated status and strong ties to tradition can curtail the freedom of family members associated with these firms. Even so, the co-authors argue, shinise show that by promoting local cultural traditions, companies could help preserve their own longevity.

“Family Firms as Institutions: Cultural Reproduction and Status Maintenance Among Multi-centenary Shinise in Kyoto” was published online February 1, 2019, in Organization Studies.