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I don't mean to be insensitive but that is straight up bizarre behavior. In what way does Japanese business culture benefit from this? I'm open to ideas that it does add something.

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I don't know if it's helpful but I can give two examples where it's harmful. In both cases the intense hierarchical culture actively obstructs bad news.

1. Asiana crash. Copilot did not want to tell pilot the approach looked wrong, and they flew into the ground. https://thediplomat.com/2013/07/asiana-airlines-crash-a-cock...

2. Fukushima and Tepco. Nobody wanted to say, "oops we messed up, might want to evacuate." http://www.bbc.com/news/world-asia-18718486

It's not beneficial, it's just how it is. I worked a job in Japan where one employee was late delivering a project, so his manager spent literally his entire day standing over his shoulder and berating him loudly for not getting it done sooner and being a failure. As you might imagine, this did not help get the project done sooner.

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