1. The Century-Old Company Problem: Why Japan Has 46,000 Businesses Over 100 Years Old

Although Japan entered the 21^st century as a wealthy country and a healthy society, the demographic challenges that followed have led some observers to the conclusion that the country’s businesses are too anachronistic. Japanese business practices, long-term orientation and employee-centered management have come under fire as in some instances they do not mesh well with the push for financial returns and governance reforms. And yet, according to a 2025 survey by Teikoku Databank, Japan had 46,708 companies that were more than 100 years old, with more than 1,800 operating for over 200 years. The average lifespan of S&P 500 companies has shrunk from roughly 60 years in the 1950s down to about 15 years today.

2. What “People-Centered Management Means In Japan

According to Funabashi Haruo, Author of books including Nihon keizai no kokyō o aruku (A Stroll Through the Birthplace of the Japanese Economy) and Koten ni manabu keieijutsu sanjū-rokkei (Thirty-six Management Techniques Taken from the Classics), one of the core attributes of enduring businesses is “a management style that puts people first.” (Source: https://www.nippon.com/en/features/c00615/)

When I talk with friends who were born and raised in the Anglo-American world, I often hear their skepticism about the Japanese “people-centered management.” Some see this just as a front-window statement that the Japanese companies never live by. The gap comes, once again, from the assumptions we have about the meaning of “people-centered.” In the western hemisphere, this concept is closely tied to individual rights. We assume that a company that claims to practice people-centered management, prioritizes the employees’ psychological safety, work-life balance, mental health support, equal growth opportunities, empowerment and autonomy, regular feedback and transparent leadership. 

In Japan, however, “people-centered management” is built first and foremost upon “the social contract between firm and employee, a commitment to work as a community to achieve economic security for all members of the workforce.”  (James C. Abegglen, “21^st-Century Japanese Management”)

3. Why This Is Neither Altruism Nor Socialism

Japanese people-centered management is not an expression of kindness. It is an instrumental strategy for organizational survival. 

When we hear that many Japanese companies function like communities, devoted to the well-being of their members, we hear “corporate family,” “altruism,” and maybe even “socialism with a corporate logo.” And yet, the Japanese “people-centered management” has nothing to do with either altruism or socialism. The company’s single goal is to perpetuate itself continuously across generations because by doing so, it will ensure the economic security of its members – again, across generations. So the goal here is neither member happiness for its own sake nor the shareholder return. 

Even though the Japanese “people-centered management” is possible only because of the human members of the company, it is developed as a philosophy to serve exactly those members. In this sense, PCM is an instrumental tool for perpetuating the company for the sake of the economic security of its members rather than an altruistic concept. The company protects its long-term employees and works to maintain good relationships with its suppliers, partners and investors. The members’ well-being matters instrumentally, not morally. 

4. A Case Study: How Japanese Companies Weathered Covid Without Layoffs

During the Covid-19 pandemic, the organization I was working for, made sure that none of us lost our job even though the industry suddenly found itself without any revenues. The management was aware that if they had let us go, they would lose the tacit knowledge the employees shared and their willingness to absorb a bad year. If the company had let us go, it would have threatened the thing it was optimizing for – its own survival. So the industry leadership negotiated subsidies for the companies and the employees stayed on, weathering the storm together. As an employee, I was grateful for being allowed to keep my job but this did not prevent me from understanding that that care was not altruism. 

5. What Happened When Other Industries Did Not Take Care: The Aviation Shortage

It is no secret that the aviation industry faced a severe crisis after the end of the Covid-19 Pandemic. They suffered from shortage of pilots, ground-handling staff, traffic controllers, etc., or not enough people to run the system after most of the employees were either laid off or offered early retirement in early 2020. Airlines and airports lost the accumulated knowledge, skills and experience as they lost their employees so even in 2025, they were still short of people who could run the system and take it back to pre-pandemic levels. (Source: https://www.aviationext.com/the-human-turbulence-staff-shortages-in-aviation-after-covid-19/)

While the Japanese companies that absorbed a bad couple of years to keep their employees may sound like “kind employers” the story is much more layered than that. The “kindness” comes from the shared goal of perpetuating the business in pursuit of prosperity. And the management’s responsibility to create an environment where the employees can best do their work comes as no surprise. 

6. The Limits Of The Community: Who Gets Protected

Protection in a Japanese company follows the logic of continuity, not a universal ethic of care.

Japanese companies do not protect everyone equally. The protection follows the logic of continuity rather than sentiment. Toyota and other corporations with real leverage over their suppliers will squeeze them hard on cost-down demands. Smaller, less dominant companies that are dependent on a given relationship lasting, tend to protect it instead. Also, within the workforce, the line that holds is between regular, full-time employees and non-regular staff – part-time and contract workers – who structurally sit outside the same protections. In both cases, the “kindness” scales with how much the relationship matters to the company’s own continuation, not a universal ethic of care.

7. What This Means If You Are Doing Business With A Japanese Company

A general appeal to employee welfare seldom moves a Japanese counterpart. An appeal to the company’s continuity on the other hand does.

For a foreign executive or negotiator, this distinction changes what moves a Japanese counterpart. An abstract appeal to employ welfare like “this merger will be good for your people,” “this restructuring protects your staff,” etc. tends to land as a sentiment superimposed on a decision. It doesn’t address what the company is actually optimizing for.

An appeal framed around continuity, on the other hand,  speaks the language of the organization itself: how a deal, a partnership, or a management change secures the company’s ability to keep functioning across the next decade, the next generation of employees, and the next economic slowdown.

8. How This Plays Out In M&A, Hiring and Long-Term Partnerships

This is clearly visible in three places I see repeatedly in my own work. In M&A and market entry, due diligence that focuses only on financials misses the most important question: does the acquiring company intend to preserve the organization as a going concern or treat it as assets to be absorbed and discarded? We help companies through this question in post-M&A cultural integration in Japan.

In hiring, when bringing someone into a Japanese company, is the company implicitly asking them to join that social contract rather than just accept a job description? Foreign employers who skip that framing often can’t explain why loyalty doesn’t show up the way they had expected. This is why cross-cultural training for executives working with Japan starts with how the organization sees itself.

And in long-term partnerships and supplier relationships, the companies that get treated as reliable are the ones that show they intend to still be there in ten years and not the ones with the best quarterly terms.

This doesn’t mean we should abandon the language of employee welfare. Rather, we should understand that in a Japanese context, welfare is commitment to continuity, not the goal in itself: when you get the order of operations right, the rest of the relationship tends to follow.

9. The Question We Need To Ask

So when my Anglo-American friends ask whether Japanese “people-centered management” is just a front window statement, I don’t think the answer is yes or no. This would be the answer to the wrong question. The question we should be asking is not whether Japanese companies care about their people in the way we understand the word “care.” Rather, it’s whether a 200-year old company and a company that didn’t survive the pandemic were running on the same operating system. The companies still standing after a century were deliberately built to last, and lasting required making sure that the people who made it possible had the environment in which they could perform their best work until the next generation was ready to take over and then do the same in return.