Structural Changes in Japanese Firms: Business Dynamism in an Aging Society
IMF Working Papers, September 4, 2020
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- Structural Changes in Japanese Firms: Business Dynamism in an Aging Society
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Bibliographic details
- Authors: Gee Hee Hong, Arata Ito, Yukiko Umeno Saito, Anh Thi Ngoc Nguyen
- Published: September 4, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513556338.001
Summary
- Paper examines firm exit patterns in Japan between 2007 and 2017 using a rich firm-level dataset.
- The COVID-19 pandemic has posed a serious threat to the survival of Japanese firms, highlighting the importance of understanding how and why firms exit.
- Firm exit patterns have been heavily influenced by Japan’s demographic trends: a majority of exits in recent years were voluntary exits of firms (business closures) owned by CEOs aged 65 years or older without business successors.
- Other “traditional” firm exits (such as bankruptcies) have declined.
- Findings underscore the importance of addressing business transition issues in a rapidly aging society.
Key Findings
- Temporal coverage: 2007 to 2017.
- Dominant exit type in recent years: voluntary exits (business closures) of firms owned by CEOs aged 65 years or older without business successors.
- Decline observed in other traditional exit types, including bankruptcies.
- Implication: demographic trends (population aging) are a major driver of changing firm exit patterns.
Policy Implications and Recommendations
- Prioritize addressing business transition and succession issues in an aging society to reduce voluntary exits due to lack of successors.
- Design policies that facilitate business succession, transfer, or consolidation to preserve firm continuity and employment.
- Consider targeted support for small and medium enterprises facing CEO age-related succession risks.
Subject Coverage and Keywords (as listed)
- Subjects: Aging, Demographic change, Economic sectors, External debt, Interest payments, Manufacturing, Population and demographics, Small and medium enterprises
- Keywords: Aging, business succession, consumer company, Demographic change, exit rate, exit type, firm exits, firm growth, Global, inter-firm-network, Interest payments, Manufacturing, partner company, population aging, respondent firm, Small and medium enterprises, transaction network, WP, zombie firm, zombie firms
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- Working Paper