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Innovation in centralized organizations: examining evidence from Soviet Russia

Author

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  • Dmitriy Chulkov

Abstract

Purpose - – This study aims to examine the economic factors that determine innovation pattern in centralized and decentralized economies and organizations. Design/methodology/approach - – Empirical evidence on innovation in the centralized economy of the Soviet Union is reviewed. Existing theoretical literature in this area relies on the incentives of decision-makers in centralized organizations and on the concept of soft budget constraint in centralized command economies and hard budget constraint in market economies. This study advocates applying the hierarchy/polyarchy model of innovation screening to explain the pattern of innovation in centralized economic systems. Findings - – Screening and development of innovation projects can be organized in a centralized or decentralized fashion. The differences in innovation between centralized and decentralized economic systems may be explained by elements of the principal-agent theory, the soft budget constraint model, and the theory of decision-making in hierarchies and polyarchies. Empirical evidence shows a sharp slowdown in both innovation and economic growth in the Soviet economy following the economic decision-making reform of 1965. The theoretical explanation most consistent with this evidence is the hierarchy decision-making model. Originality/value - – Comparisons of innovation in centralized and decentralized economies traditionally relied on decision-makers' incentives and the concept of soft budget constraint. Upon analysis of empirical evidence from the centralized Soviet economy, this study advocates explaining innovation patterns based on decision-making theory of hierarchy.

Suggested Citation

  • Dmitriy Chulkov, 2014. "Innovation in centralized organizations: examining evidence from Soviet Russia," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 41(1), pages 123-139, January.
    • Handle: RePEc:eme:jespps:v:41:y:2014:i:1:p:123-139
    DOI: 10.1108/JES-05-2011-0057
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    Citations

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    Cited by:

    1. Konstantin Fursov & Thomas Thurner, 2016. "God Helps Those Who Help Themselves! A Study of User-Innovation in Russia," HSE Working papers WP BRP 59/STI/2016, National Research University Higher School of Economics.
    2. Irina Dezhina, 2017. "Science and Innovation Policy of the Russian Government: A Variety of Instruments with Uncertain Outcomes?," Public administration issues, Higher School of Economics, issue 5, pages 7-26.
    3. Konstantin Fursov & Thomas Wolfgang Thurner, 2017. "Make it work!—a study of user innovation in Russia," Science and Public Policy, Oxford University Press, vol. 44(3), pages 392-402.
    4. Irina Yakovenko, 2020. "Fuzzy Stochastic Automation Model for Decision Support in the Process Inter-Budgetary Regulation," Mathematics, MDPI, vol. 9(1), pages 1-17, December.

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