In America, heir-run companies perform something like 10-20% worse once the son or daughter takes over the business.
In Japan, you don't see this discrepancy. Â In fact, heir-run companies perform better!
Another fact about Japan: Â the median age of adoption is a little over 25 years old. Â Most adoptees are male.
It turns out that pretty much all of the difference in performance between heir-run companies in Japan and America is attributable to the fact that in Japan, if you don't think your son is going to run the company well, you choose a highly-qualified, 25 year old male, and adopt him.
This isn't adoption in the take-him-under-your-wing-and-give-him-some-guidance type of way. Â It's actual, legal adoption wherein the adoptee takes the family name.
Tip o' the hat to the recent "re-broadcast" of the Church of Scienology episode on the Freakonomics podcast.
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