Innovation in centralized organizations: examining evidence from Soviet Russia

Dmitriy Chulkov

Journal of Economic Studies, 2014, vol. 41, issue 1, 123-139

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.

Keywords: Innovation; Project evaluation; Hierarchy; Command economy; Polyarchy (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:41:y:2014:i:1:p:123-139

DOI: 10.1108/JES-05-2011-0057

Access Statistics for this article

Journal of Economic Studies is currently edited by Prof Mohsen Bahmani-Oskooee

More articles in Journal of Economic Studies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().