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Samsung Galaxy Note 7 Crisis Signals Problems at Korea Inc.

SEOUL, South Korea — Before a world audience watching online, Samsung on Monday offered details and schematics showing how its Galaxy Note 7 smartphone went from cutting-edge technology to a costly, combustible failure.

But for many of the company’s critics, the most interesting part of the presentation was what Samsung did not say: How could such a technologically advanced titan — a symbol of South Korea’s considerable industrial might — allow the problems to happen to begin with?

The answer to that question gets to deep shortfalls that former employees, suppliers and others who watch the company say may have contributed to the incident. Samsung, like South Korea as a whole, fosters a top-down, hidebound culture that stifles innovation and buries festering problems, they say.

For those critics, these problems have come to light through another front: politics. Samsung has been caught up in a scandal surrounding the country’s president, which they say illustrates a hierarchical culture that tends to micromanage away creativity and insulate family-run business empires from accountability and competition.

“The Korean economy as a whole has reached a kind of limit,” said Park Sang-in, a Seoul National University economics professor who thinks that the cozy relationship between the government and business is stifling innovation in South Korea.

Mr. Park pointed to a decision by a South Korean court last week to block the arrest of Jay Y. Lee, Samsung’s de facto leader, after a prosecutor sought a warrant accusing Mr. Lee of bribery in relation to the presidential scandal. A string of major South Korean executives, including Mr. Lee’s own father, have been pardoned or had sentences suspended after being convicted of wrongdoing over the past decade.

Samsung has said Mr. Lee did nothing illegal. But corporate executives in recent years have said Mr. Lee has been working to loosen up a top-down corporate culture. Under him, Samsung began a campaign to root out harsh and often violent language supervisors used with their staff, a practice common in the South Korean corporate world. Samsung officials described Mr. Lee as a polite, casual leader who encouraged employees to use English more widely in internal communications.

Though Samsung did not address its corporate culture directly in its discussion of the Note 7, it apologized and detailed new steps it would take to stop future problems, including naming a board of battery advisers.

“To produce an innovative Galaxy Note 7, we set the goals on battery specifications,” D. J. Koh, Samsung’s mobile chief, said on Monday. “We now feel a painful responsibility for failing to test and confirm that there were problems in the design and manufacturing of batteries before we put the product out to the market.”

Over the past decade Samsung and South Korea have been widely viewed as a model of forward-thinking, technological prowess. In Asia it was viewed as the exception to the sluggish economic growth of nearby Taiwan and Japan, whose once world-beating electronic makers have been in decline.

So large and influential is Samsung that some worried South Koreans call their own country the “Republic of Samsung.” The company is responsible for 20 percent of South Korean exports, and any blow to its success often raises anxiety about the overall health of the country’s economic prospects.

But as with the rest of the country, a shake-up has been slow to come. In recent years the company has run initiatives to push back against what is widely described as a rigid, top-down management system. Samsung engineers and midlevel managers are seldom allowed to second-guess management goals set by top bosses, former employees say.

Pressures rose after Mr. Lee’s father, Lee Kun-hee, its chairman, suffered a stroke in 2014 and fell into a coma. One engineer in the United States who works with Samsung suppliers on projects, including the Note 7, said Samsung’s no-questions-asked corporate culture had grown more inflexible in recent years.

“In the Samsung culture, managers constantly feel pressured to prove themselves with short-term achievements,” said Kim Jin-baek, who worked at Samsung until 2010 before becoming a professor at the business school of Chung-Ang University in Seoul. “Executives fret that they may not be able to meet the goals and lose their jobs, even when they know the goals are excessive.”

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