The Timeless Art of Longevity: Lessons from Centuries – Old Companies

In a world focused on rapid growth and innovation, the quiet resilience of long-lasting companies offers a powerful lesson: tradition, when properly nurtured, can be the foundation for enduring success. While many businesses today struggle to survive even a quarter-century, some companies, particularly in Japan, have thrived for centuries. Asian countries have been known for aging demographics and stagnation in growth, which contrasts with the non-linear growth that we as investors look for in the ever-dynamic world.

The Shrinking Lifespan of Modern Companies
In 1958, the average lifespan of a company listed on the Standard & Poor’s 500 was 61 years. By 2016, that number had plummeted to less than 18 years. A study by McKinsey forecasts that by 2030, 75% of today’s S&P 500 companies will have disappeared or been replaced. Despite this trend, over 3,000 companies in Japan have been in operation for more than 200 years, many of which are small and medium-sized enterprises (SMEs) passed down through generations of the same family. Germany, too, is home to numerous centenarian companies, particularly in the manufacturing sector.

In stark contrast, South Korea, despite its 4,000 years of history, has no companies older than 200 years and only seven that have surpassed the century mark. This raises an intriguing question: What is it about Japan that allows its businesses to thrive across centuries? And in an era dominated by high-octane growth and rapid innovation, is there something valuable to be learned from these bastions of tradition and stability?

The Secret to Japan’s Long-Lasting Companies
Japan’s oldest businesses are found in sectors that have remained relatively stable over time, such as hospitality, construction, and food production. The world’s oldest hotel, Nishiyama Onsen Keiunkan, has been welcoming guests since 705. Confectioner Ichimonjiya Wasuke has been selling sweet treats in Kyoto since 1000, and Osaka-based construction giant Takenaka was founded in 1610. Even globally recognized brands like Suntory and Nintendo have roots stretching back to the 1800s.

What these companies have in common is a deep commitment to preserving their core values and focusing on what matters most. They have succeeded not by chasing every new trend, but by maintaining a laser focus on the fundamentals of their business. This commitment to tradition does not mean they have resisted change; rather, they have been selective in their innovations, ensuring that new developments enhance rather than detract from their core offerings.

The Balance Between Tradition and Innovation
Peter Drucker, the founder of modern management, famously posed the question, “Will the corporation survive?” His answer was, “Yes, but not as we know it.” This suggests that while survival is possible, it requires adaptation. For a company to endure, it must balance the need for change with a respect for tradition—a principle that Japan’s oldest companies have mastered.

Studies on corporate longevity often focus on either external environmental factors (such as competition and industry life cycles) or internal factors (such as a company’s resources and capabilities). However, few studies have successfully integrated these perspectives to explain how some firms achieve such remarkable longevity. Vicki TenHaken, a scholar of Japanese business practices, has identified several key behaviors that contribute to corporate longevity in Japan:
– Keeping businesses within the family
– Maintaining original brand names
– Observing traditions
– Inheriting unique technologies
– Preserving traditional products or services

One company that we know of that has evolved over 100+ years is Donghwa Pharma, a Korean conglomerate, founded in 1897. The company achieved four records in the Guinness Book of Records for being the oldest manufacturing company as well as the oldest pharmaceutical company in the Republic of Korea (both from 25 September 1897), having the oldest registered trademark (see fan in Figure 2) in the Republic of Korea (since 15 August 1910), and having the oldest registered product (Whal Myung Su, from 16 December 1910). Its signature product, Whal Myung Su, has sold over 8.5 billion bottles, and its market share in the Korean digestive market is about 70%.

Fig 1: Packaging of the brand since 1897 of its signature medicine

Fig 2: Evolution of the logo of the company

From the perspective of the continuity of tradition, Dongwha Pharmaceutical has maintained its original brand name, traditional products (based on the unique prescription from the loyal court), and long-lived business for the past 124 years. While the company was not succeeded by the founder’s family because of the history of Japanese colonialism—the company was inherited by another national patriot’s family in 1937—their corporate philosophy is still enshrined: (1) Dongwha serves customers by making effective medicines (importance of customers and quality of products); (2) Dongwha treads the path of virtue (corporate ethics); (3) Dongwha is a family whose members are willing to work diligently and live fruitful lives (loyalty of employees); and (4) all the staff of Dongwha admit and correct their mistakes in business and turn them into opportunities (responsibility of employees). The company went through a period of considerable turbulence in the Republic of Korea, marked by Japanese colonialism (1910–1945), the Korean War (1950–1953), and Korean industrialization led by Korean conglomerates (called “chaebol”) (since the 1960s). Even having experience such a tumultuous history, based on the company’s philosophy, Dongwha was the center of liaison offices to support the Korean Independence Movement and financially supported the national enlightenment movement during the Japanese colonial period. In addition, when they faced cutthroat competition from other imported foreign medicines and new domestic medicines, the company overcame the challenges through win-win strategies with their traditional partners (wholesale pharmaceutical distributors). Even with valuable traditions, under many challenges and environmental changes, long-term survival of Donghwa was not possible without continuous efforts toward changes while protecting core competencies. Thus, the right balance between tradition and innovation is a key success factor.

While the company started with Whal Myung Su, Whal Myung Su is not Dongwha Pharmaceutical’s only product. The company improved its research and development (R&D) capabilities through an internal research center (launched in 1973) as well as partnerships with many advanced pharmaceutical companies from the United States, Switzerland, Denmark, France, Italy, Japan, and so on. Based on its continuous R&D efforts, the company has developed and sold over 200 pharmaceutical products, including Fucidin ointment (a topical antibiotic launched in 1980; its current market share in the domestic ointment market is about 60%, dominant market share #1 in its category) and Pancold (a cold medicine launched in 1968; its market share in the domestic cold medicine market is about 10%, market share #2 in its category).

Inherited by national patriots, Dongwha Pharmaceutical has maintained its original brand name and traditional products and has been a long-lived business for the past 100+ years; its corporate philosophy regarding the importance of customers and quality of products, corporate ethics, loyalty of employees, and employees’ responsibilities is still enshrined in their operations. Even with valuable traditions, when they faced competition from other imported foreign medicines and new domestic medicines, the company overcame the challenges through win-win strategies with their partners. In addition, to keep up with the times, the company exercised diverse efforts, including marketing (innovation on its brand, logo, advertising, and products), continuous technological developments through R&D, new distribution channels, and new corporate social responsibilities. The long-term survival would not have been possible without continuous efforts toward changes while protecting core competencies.

Is longevity bad for innovation?
While there is much to admire about companies that have stood the test of time, longevity can also present challenges, particularly in terms of innovation. Japan’s startup scene, for example, has been criticized as sluggish compared to more dynamic markets like the United States. This may be due in part to a cultural tendency to preserve the status quo rather than pursue disruptive change.

However, the world is changing rapidly, and in today’s competitive environment, preserving culture and tradition can often take a backseat to growth and innovation. Yet history shows that building a sustainable company with a strong foundation remains crucial for long-term success. The key is finding the right balance between respecting tradition and embracing the future.

The longevity of a company is not merely about surviving through time; it’s about thriving by adhering to core values while adapting to new challenges. Companies like those in Japan and a few in Korea that have endured for centuries show us that tradition and innovation are not mutually exclusive. Instead, they can be powerful allies in building a business that lasts, creating a legacy that future generations can admire and build upon.

References & Sources
1. Drucker, P.F. The Practice of Management*; Harper & Row: New York, NY, USA, 1954.
2. Garelli, S. Why You Will Probably Live Longer Than Most Big Companies. IMD, 2016.
3. The Bank of Korea. The Factors and Implications of Japanese Corporate Longevity. 2008.
4. The Korea Chamber of Commerce & Industry. KCCI Brief. 2019.

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