What is the secret of corporate longevity?
Dec 16th 2004 |From the print edition of THE ECONOMIST
ACCORDING to the book of Genesis, Enoch (or Henok), son of Cain and father of Methuselah, walked the Earth for 365 years and then ascended to heaven without dying. Inspired by this feat, a club was formed in France in 1981 that took his name. Les Hénokiens is a fraternity of companies that are at least 200 years old, have stayed in the control of one family throughout, are financially healthy, “modern” and are still run by a family member.
Each year representatives of the 33 member companies, from seven countries, gather for three days of fun and discussion. This year’s host was Ditta Bortolo Nardini, an Italian grappa distillery founded in 1779. The nine members of Britain’s Tercentenarians Club, founded in 1970 for firms at least 300 years old that still have a connection to the founding family, make do with an annual lunch.
The oldest member of Les Hénokiens is Hoshi, a Japanese inn founded in Komatsu in 718. Run by Zengoro Hoshi, the 46th generation of the family to be in charge, the firm’s motto is unusually practical: “Take care of fire, learn from water, co-operate with nature”. But, according to “Centuries of Success”, published last year by William O’Hara, there is an even older company, also Japanese. Kongo Gumi, founded by a Korean in Osaka in 578, is a builder of Buddhist temples, Shinto shrines and castles—and now also offices, apartment buildings and private houses. Both are family businesses.
The oldest European family business, according to Mr O’Hara and Peter Mandel in Family Business magazine (see table), is Château de Goulaine, a vineyard in France’s Loire valley that dates from 1000—and also boasts a museum and butterfly farm. Britain’s oldest family business, founded in Huddersfield in 1541, is John Brooke & Sons, a textile-maker that helped clothe Britain’s bravest during the battle of Trafalgar and the second world war, but has now abandoned manufacturing and turned its mills into a business park.
Not surprisingly, the oldest family firms in the United States are a bit younger. Zildjian Cymbal, of Norwell, Massachusetts, purveyor of cymbals and drumsticks to many of the world’s greatest percussionists, was founded in 1623. But that was in Constantinople; the family did not emigrate to America until 1909. A more authentic choice is the Tuttle Farm, which grows strawberries and vegetables in New Hampshire, and runs a small shop. It is currently run by the 11th generation of the family.
Ancient, but maybe not commercially
Yet it is not easy to say with certainty whether such examples are really old, continuous businesses or, rather, latterday firms that were once trade associations, state organisations or, say, religious communities that turned commercial at some stage in their lives. Is, for example, Château de Goulaine really a 1,000-year-old business or a fine old castle that has only fairly recently taken to selling wine and displaying butterflies? The Shore Porters’ Society, now a transport firm, whose lorries can be seen all over Europe, was founded in 1498, but for much of its history it was a semi-public body controlled by the town of Aberdeen, only gaining full independence in 1850. How long has it been a genuine business?
Calculating the age of big complex companies—many of which are public, not family owned—is arguably just as tricky, for many of these firms have grown through multiple acquisitions. That makes it hard to know to what extent they are truly descended from their oldest part. Harsco, for instance, a big American engineering and industrial-services company, can proudly trace parts of its operations to 1742, when a firm called Taylor-Wharton began life as a colonial iron forge. But Taylor-Wharton, whose early products included cannon balls for George Washington’s continental army, was not absorbed into what is now called Harsco until 1953.