Shukko in Japanese companies and its economic and managerial effects

Shiho Futagami, Tomoki Waragai and Thomas Westphal

No FS IV 98-5, Discussion Papers, Research Unit: Market Dynamics from WZB Berlin Social Science Center

Abstract: Japanese-style management is characterized by the traditional practice of so-called lifetime employment. Shukko plays an important role in supporting and supplementing Japanese long-term employment. Shukko involves the transfer of parent company employees to an affiliated company or a non-affiliated company. In Japan’s current prolonged recession, Japanese companies are forced to transfer employees to affiliated companies and non-affiliated companies in order to cut personnel expenses. So Shukko has negative implications. However, Shukko also has positive aspects. Japanese companies have strategies to educate and train employees and to enable them to acquire know-how through Shukko in affiliated companies and non-affiliated companies. This allows Japanese companies to adapt their capabilities in a flexible way to a changing environment.

Date: 1998
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