Why Adult Adoption is Key to the Success of Japanese Family Firms


What happens when the heir to a family business isn’t up to the job? Not great things, apparently. But the Japanese have a solution: adult adoption. Rather than hand the firm to a less-than-worthy blood heir, Japanese families often adopt an adult to take over. This tradition is the subject of Vikas Mehrotra‘s paper “Adoptive Expectations: Rising Sons in Japanese Family Firms,” which is featured in our latest podcast and hour-long Freakonomics Radio special “The Church of Scionology.” (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player, or read the transcript here.) 

America and Japan have the highest rates of adoption in the world – with one big difference. While the vast majority of adoptees in the U.S. are children, they account for just 2% of adoptions in Japan. The other 98% are males around 25 to 30. Mehrotra believes this is the key to one of Japan’s unique differences. Across the developed world, family firms under-perform professionally-run businesses. But in Japan, it’s the opposite. Japan’s strongest companies are led by scions, many of them adopted. “If you compare the performance under different kinds of heirs, blood heirs versus adopted heirs, the superior performance of second-generation managed firms is pretty much entirely attributable to the adopted heir firms.”

Mehrotra explains that adopting a scion is similar to a hostile takeover. Blood heirs are under the constant pressure of knowing that if they under-perform, they’ll be replaced.

Tokugawa Ieyasu, first shogun of the Tokugawa period. (Photo via Wikimedia Commons)

The roots of Japanese adult adoption trace back to merchants of the Tokugawa era (1603-1867). It was suspected by scholars that the initial motivation was to avoid field division. Since then, the upper class has embraced the practice in full. The current Japanese business landscape is filled with names you know: Suzuki’s current chairman and CEO, 81 year-old Osamu Suzuki, is an adopted son — the fourth one in fact — to run the company. When it came time, Osamu Suzuki chose his son-in-law, Hirotaka Ono, as his heir, rather than his biological son. Ono married Suzuki’s eldest daughter, just as Suzuki had done a generation prior. But in December 2007, Ono died of pancreatic cancer, forcing Osamu to return as chairman and CEO. As of April 2011, Osamu had created a four person board to help run the company, led by his own biological son, Toshihiro Suzuki. Toshihiro might well become the first blood-related Suzuki scion in four generations, but it’s far from certain, and of course, he will always be the second choice of his father.

Unlike China or India, where preference for baby boys is extreme to the point of gendercide, the Japanese have an adage that rejoices in the birth of a girl:

You can’t choose your sons, but you can choose your sons-in-law.

Today, it is preferred (though not required) for the adopted heir of a business dynasty to marry one of the family’s daughters, becoming a family member twice over. Mehrotra explains the typical process: “You pick a candidate, an adoptee, preferably from Tokyo University, a smart person, and so on, and someone you have the opportunity to observe. And then you sort of do…what is called an omiai, which literally means ‘see marriage’, with one of your daughters…Then the person marries your daughter and is adopted into the family.”

If a potential adoptee is already married, a married couple can be adopted together. The only conflict there, since there is really no blood relation, becomes one family members know well: who dusts the ancestor’s grave?


The church of Scientology is a cult and their views on just about everything should be carefully avoided.

Matthew Philips

Martin, did you notice that it's the Church of Scion-ology. Not Scientology. As in scions.


In the West, perhaps the best example of the success of this system is the Roman Empire. When Domitian was murdered in year 96, Nerva was chosen to be emperor by the Senate. He was older. He adopted Trajan. Trajan adopted Hadrian. Hadrian adopted Antoninus Pius. Antoninus Pius adopted Marcus Aurelius and Lucius Verus, who ruled together until Verus died. Marcus Aurelius then screwed things up by letting his waste of a son, Commodus, become emperor. Commodus was not a good emperor and things fell apart.

The adoptive trail went from 96 to 180, almost a century of terrific leadership. These emperors were known to be intelligent, sensible men. Commodus, by contrast, is known to history as being stupid and gullible, not desirable traits in an emperor, though little is actually known about him.

BTW, some of these men, notably the most war-like emperors, Trajan and Hadrian, were likely gay. They had no "don't ask, don't tell" policy in Rome.

Finally, the idea of adoptive emperors harks back to Augustus himself. His successor, Tiberius, was his wife Livia's son and Augustus adopted him. It appears Tiberius didn't want to be emperor - he stepped aside, literally moving to an island, to make way for Augustus' nephew but that nephew died. Tiberius selected Caligula to follow him. We don't actually know much about Caligula - whether the hideous stories are true or fiction - but he was considered very bright and was Tiberius' brother's son.


John Edward

Thanks for the bits about the Trajan and Hadrian, et al. While it's completely unrelated to the story, I've just begun Gibbon's Decline and Fall of the Roman Empire and your petit info adds further depth to an already famously exhaustive account.

Daniel Ibn Zayd

As an adoptee, I have to give the Japanese credit for honesty. The Anglo-Saxon tradition of adoption has its roots in indentured servitude, not family creation. But in both instances the reason for the adoption is economical, not personal or familial. If only the West were so honest and upfront in terms of their own economic exploitation of other nations and the trafficking of their children.

Felicitas Yakut

What a great idea! I wonder how one goes about doing such an adoption in the U.S., for the purpose of easing one's old age and the continuation of a small winery business.

Moran Kanae

I love this idea. I wish we had this in America. I have made a success of myself by myself and have no family. I would love to be adopted into a family. I've always wanted a family of my own. I'm sure I'm not the only adult who feels this way. Maybe someday.