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Book Review
By Arie de Geus, Boston: Harvard Business School Press, 1997. 240 pages, hard cover, $24.95
Name one large company that is over 700 years old. Too difficult? Then try naming a large company that is 500 or even 200 years old? In the Living Company, Arie de Geus identifies these long-lived companies and discusses the essential traits that enabled them to adapt and survive through the centuries. A 40-year veteran at Royal Dutch/Shell, de Geus was coordinator of worldwide planning when Shell commissioned its famous 1983 study on corporate longevity. This book is based in large part on the results of that study and on de Geus's years of experience in strategic management.
"Human beings have learned to survive, on average, for seventy five years or more, but there are very few companies that are that old and flourishing," he writes. In 1983, Royal Dutch Shell launched a research study to examine the successful traits of companies older than Shell, which at the time was 100 years old. Shell researchers identified companies that already existed by the fourth quarter of the nineteenth century, were important in their industries, and still had strong corporate identities. Some thirty companies throughout North America, Europe, and Japan met the latter criteria. The companies ranged in age from 100 to 700 years, with twenty-seven having sufficiently well-documented histories to study in depth. The results of the Shell study revealed that the average life expectancy of a corporation is much shorter than its potential life span. In the northern hemisphere, the average life expectancy of companies was well below 20 years, while the average life span of a multinational corporation was between 40 and 50 years. In fact, one-third of the companies listed in the 1970 Fortune 500 had been acquired, dismantled or merged with other companies by 1983.
De Geus notes that commercial corporations are relative...