The Japanese Succession Model: A Wining Formula

By Prof. Enrique Soriano

The Japanese succession practice of Mukoyoshi, where a family adopts an adult male—often a son-in-law—to carry on the family business, offers a fascinating lens through which to explore the long-term success of family enterprises. As I continue my research in collaboration with family business specialists across Asia and Europe, the Mukoyoshi practice stands out as a key factor in the unparalleled longevity of Japanese family businesses—a phenomenon largely unheard of in other parts of the world.

The Kikkoman Story: A Testament to Strategic Adoption

One of the most successful examples of Mukoyoshi in action is Kikkoman Corporation, a global leader in soy sauce production. The company, which began over 300 years ago, faced a succession crisis in the early 20th century when the Mogi family, one of the founding families, lacked a male heir to take over the business. To preserve their legacy, they adopted Shige Mogi, a son-in-law, through the Mukoyoshi practice.

Shige Mogi not only adopted the Mogi family name but also brought innovative strategies that transformed Kikkoman into a global brand. His leadership was instrumental in Kikkoman’s expansion into the U.S. market in the 1950s, a move that significantly boosted the company’s international presence. This strategic adoption ensured that Kikkoman remained under strong family leadership while adapting to new market opportunities, demonstrating the profound impact of Mukoyoshi on the growth and longevity of Japanese family businesses.

Strategic Benefits of Mukoyoshi

The practice of Mukoyoshi offers several strategic benefits that make it a valuable tool for family business succession:

1. Expanding the Talent Pool: By adopting a son-in-law, families can choose from a larger pool of potential successors. This allows them to select individuals with the right skills, experience, and temperament to lead the business effectively. For example, Kikkoman’s adoption of Shige Mogi brought in fresh perspectives that were crucial for the company’s expansion and success.
2. Aligning Interests: Adoption and marriage contracts in Japan often include provisions that align the interests of the adopted heir with those of the founding family. This creates a strong incentive for the heir to maximize the value of the business, as their future—and that of their descendants—is tied to the company’s success. This alignment is key to maintaining the business’s continuity and prosperity across generations.
3. Preserving the Family Name and Legacy: Adoption allows the family name to continue even in the absence of a biological male heir. This ensures that the family’s legacy and values are preserved for future generations. The Mogi family’s decision to adopt Shige Mogi is a prime example of how this practice has enabled the company to maintain its heritage while continuing to innovate and grow.

A Comparative Perspective

Interestingly, research has shown that Japanese family businesses led by adopted heirs often outperform those led by biological descendants. This contrasts with trends observed in family businesses in other developed countries, where succession can be more challenging and less effective. The ability to select and groom a successor based on merit rather than birthright gives Japanese family businesses a unique advantage in ensuring long-term success.

As my research deepens, particularly through ongoing collaborations with family business experts in Asia and Europe, the Mukoyoshi model emerges as a powerful testament to strategic succession planning. It highlights the importance of flexibility, meritocracy, and long-term vision in sustaining family businesses for generations, offering valuable lessons for family enterprises worldwide. But this raises a critical question: Will this Mukoyoshi model work in other countries, especially in Asia? As we explore this question, it becomes clear that cultural nuances, legal frameworks, and societal values will play significant roles in determining the applicability and success of such a model beyond Japan’s borders. The potential for Mukoyoshi to inspire new approaches to family business succession in other parts of the world is certainly worth further exploration.