Science Policy:

USA /USSR

volume II:
Science Policy in
the Soviet union

Report prepared for National Science Foundation

Directorate for Scientific, Technological and international Affairs

Division of international Programs

This research was conducted with support from
the Division of International Programs,
National Science Foundation. However, any
opinions, findings, conclusions, or recommen-
dations expressed in this document are those
of the author and do not necessarily reflect
the view of the National Science Foundation.

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SCIENCE POLICY: USA/USSR

Volume II

Science Policy in the Soviet Union

Paul M. Cocks

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TABLE OF CONTENTS

VII BACKGROUND AND APPROACH TO SCIENCE POLICY

IN THE U.S.S.R 1

The Soviet Commitment to Science

and Technology 1

Centralization of R&D Planning

and Management 4

The Separation of Science and

Industry 9

The Systems for Guiding Technical

Progress 13

VIII THE ORGANIZATION OF R&D 18

Overall Structure and Institutional

Setting 18

The Top Governing Machinery 22

The Three Institutional Subsystems
Performing R&D 45

The Basic Units 64

The Organizational System: Whole

and Parts 76

IX THE FORMULATION OF R&D PLANS AND

PROGRAMS 83

Overview of Science and Technology

Planning 83

Resource Planning and Allocation for
Research and Development 92

The Selection of Research Topics and

Tasks 106

in

The Disaggregation and Assignment of
Research Tasks 128

The Decision to Import Technology . . 149

The Structure and Content of R&D

Plans 155

The Planning System and Its Parts . . 159

X THE EXECUTION OF R&D PLANS AND THE

UTILIZATION OF RESULTS 176

Managing the Research-to-Production

Cycle: An Overview 177

Organization of the R&D Center .... 181

Conduct of R&D 184

Utilization of R&D Results 197

Evaluation of R&D Results and

Performers 234

Diffusion of R&D Results 238

XI CURRENT ISSUES AND TRENDS IN SOVIET

SCIENCE POLICY 251

The Contemporary Science Policy

Debate: Context and Content 251

Integrating Science Policy and

Economic Policy 255

Switching to an Intensive Growth

Strategy for Science and Technology . 258

Achieving Organizational Flexibility

and Institutional Restructuring . . . 262

Improving Planning and Resource

Allocation 269

Raising Management Effectiveness . . . 275

Strengthening the Bonds of

Motivation 281

Science Policy Reforms: A Balance

Sheet 284

IV

XII A COMPARISON OF SCIENCE POLICY IN THE

U.S. AND U.S.S.R 298

The Science Policy Environment .... 298

Relationship of Scientific R&D

to Industry 304

Selection of S&T Goals and Evaluation

of Results 311

Incentives and Obstacles to

Innovation 322

Institutional Responses to New

Complexity of S&T Problems 328

LIST OF FIGURES

8-1 Overall Structure of the Soviet System

of R&D Planning and Management 19

8-2 Top Level Governmental Organizations
Responsible for Science Policy Making
in the USSR 27

8-3 Organizational Structure of Science

Policy at the Union Republic Level .... 33

8-4 Structure of the USSR State Committee

for Science and Technology 39

8-5 General Organization of the USSR State

Planning Committee (Gosplan) 42

8-6 Structure of the USSR Academy of

Sciences 48

8-7 Organization and Management of R&D in

a Union Level Industrial Ministry .... 58

8-8 The Administrative Network of the USSR
Ministry of Higher and Specialized
Secondary Education (MinVUZ) 63

8-9 Organizational Structure of a Research
Institute of the USSR Academy of
Sciences 66

v

8-10 Organizational Structure of a Research

Institute of an Industrial Ministry ... 67

8-11 Organization and Management of R&D
in a Higher Educational Institution
(VUZ) 69

8-12 Organization and Management of R&D in

an Industrial Enterprise 72

8-13 Management Structure for a Typical

Science-Production Association (NPO) ... 75

9-1 Overview of the Content and Network

of Soviet Economic Planning 85

9-2 Structure of Soviet Research, Develop-
ment and Innovation Plans and Forecasts . 87

9-3 Components of the System of Research,

Development, and Innovation Planning in

the USSR 115

9-4 Organization of R&D for the Solution of

an Important S&T Problem 141

9-5 Organizations Involved in the Develop-
ment of the T-250/300-240 Thermal
Electric Turbine 145

10-1 The System of Material Stimulation of
Scientific and Technical Progress in
the USSR 193

10-2 Exemplary Planning Chart for Techno-
logical Preparation for Production in
the USSR Ministry of the Automobile
Industry 200

10-3 Organizational Structure of the

Svetlana Production Association 205

10-4 Basic Scheme of the System of Planning,
Financing, and Economic Stimulation of
S&T Development in the Soviet Electri-
cal Engineering Industry 233

VI

LIST OF TABLES

8-1 USSR, Union Republic, and Branch
Academies of Sciences (at the end
of 1976) 51

8-2 Regional Affiliates and Scientific
Centers of the USSR Academy of
Sciences (at the end of 1976) 54

8-3 Distribution of Scientific Workers by
Branch of Science: 1973 (Scientific
Research Institutes and Higher Educa-
tional Institutions) 61

10-1 The Structure of Bonus Awards for

Technological Innovation in the USSR . . . 196

10-2 Structural Makeup of Science-
Production Associations 213

VII

INTRODUCTION

Beginning in 1972 the Governments of the United
States of America and the Union of Soviet Socialist
Republics signed a series of bilateral agreements
for cooperation in various areas of science and
technology, of which there are now eleven in number.
The senior of these, the Agreement on Cooperation in
Fields of Science and Technology, was signed by
President Nixon and General Secretary Brezhnev in
May 1972 and is implemented through a U.S.-U.S.S.R.
Joint Commission on Scientific and Technical Cooper-
ation, chaired on the U.S. Side by the President's
Science and Technology Advisor. One of the twelve
active Working Groups carrying out cooperative
research under the Joint Commission is in the area
of Science Policy, which in turn focuses on two major
areas of mutual interest: the Planning and Manage-
ment of Research and Development, and Fundamental
Research Systems.

The present two-volume study, Science Policy:
USA/USSR, prepared by members of the U.S. side of
the working group, is based on the first phase of
work in Science Policy by the group concerned with
R&D Planning and Management, which lasted from
approximately 1973 to 1977. The goal of this phase
was to build a base of information which could then
serve to orient U.S. participants to more discrete
and sophisticated analyses of the policy-making sys-
tems in the respective countries concerned with
scientific and technical research; the principal
mode of operation during this phase was exchange of
visits, written information, reports, and specific
questions and answers between the U.S. and Soviet
members of the group. It became quickly apparent,
although not to anyone's great surprise, that there

Vlll

would be a number of problems in emerging with satis-
factory products, from information access and admin-
istrative difficulties to, perhaps most significantly,
entirely different perceptions of the content of the
study of science policy, incompatible terminology,
and divergent analytical traditions, not to mention
the important substantative differences in the making
of science policy in the two countries. In many
senses, we were speaking entirely different languages
to one another and for this reason our initial prog-
ress was often slow and painful.

By 1976-1977, however, enough progress had been
made to encourage U.S. participants to think about
compiling what we had learned, both about ourselves
and the Soviet Union, into monograph form in order to
make this information accessible to the public at
large. Again, not surprisingly, the job of compila-
tion was beset by many of the same difficulties men-
tioned above. An initial summary prepared by Bat telle
Columbus Laboratories was reviewed and commented upon
by U.S. participants, after which Mr. Nat C. Robertson,
a distinguished technical administrator and research
scientist with broad experience in the U.S. industrial
sector, and Dr. Paul M. Cocks, a leading specialist on
science policy in the U.S.S.R., utilized the data pre-
pared by Battelle in writing the present volumes. The
results, I believe, merit close examination by schol-
ars, scientists, government and industrial officials,
and the lay public.

The time and effort of an unusually large number of
individuals went into vaious phases of this project.
Nat Robertson and Paul Cocks deserve special praise
for taking on the extremely challenging task of sift-
ing through the mass of accumulated material, verifying
data, and integrating it with their own expert knowl-
edge to yield an intelligent and illuminating final
product. The initial summary by Battelle Columbus
Laboratories was, of course, highly instrumental in
getting the study off the ground and the contributions
of the Battelle staff are gratefully acknowledged.
The information contained in the volume on the U.S.S.R.
could not have been obtained in the first place were

IX

it not for the enthusiastic participation — which was
severely tested at times — by the U.S. members of the
Science Policy Working Group, most particularly its
former U.S. Chairman, Dr. David Z. Beckler, and of the
members of the Subgroup on R&D Planning and Management
who participated in the project's first phase (in
alphabetical order), Joseph Berliner, Lewis M.
Branscomb, Paul M. Cocks, Murray Feshbach, Richard T.
Gray, Herbert Levine, Franklin A. Long, Nat C.
Robertson, Lowell W. Steele, and Robert L. Stern. The
staff of the Arlington, Virginia office of SRI Interna-
tional assisted with the final editing and preparation
of the manuscript. Although these studies are not
official publications of the U.S. side of the working
group and only their authors are responsible for their
content, I wish to take this opportunity to thank all
those who assisted in their preparation. Financial
support for the project was provided through the
National Science Foundation.

William D. Carey

U.S. Chairman, U.S.-U.S.S.R. Working
Group on Science Policy

June 1980

-'■Until 1979 there were four subgroups of the
Science Policy Working Group : R&D Planning and Manage-
ment, R&D Financing, Training and Management of S&T
Manpower, and Systems for Stimulating the Development
of Fundamental Research. Other publications resulting
from the Working Group's efforts include Louvan E.
Nolting and Murray Feshbach, "R&D Employment in the
U.S.S.R.," Science, v. 207 (February 1, 1980), pp. 493-
503; and Systems for Stimulating the Development of
Fundamental Research (Report prepared by the U.S.-
U.S.S.R. Working Subgroup on Systems for Stimulating
the Development of Fundamental Research of the National
Academy of Sciences /National Research Council) , NTIS
Order Number PB80-162316.

AUTHOR'S ACKNOWLEDGEMENTS

In the preparation of this volume, I wish to
acknowledge the contribution by John P. Young, Alvin M.
White, Hugh L. Shaffer, and L. Ben Freudenreich, who
wrote the initial draft report for Battelle Columbus
Laboratories on which this study is based. Although I
have added a few new chapters and altered others, I
have retained much of the information and insight
included in their original analysis. At the same time,
I have drawn heavily on other source material, especi-
ally the rich and extensive science policy literature
that has evolved in the USSR since the late 1960s. In
discussing the Kremlin's policy problems and practices,
I have also tried, where possible, to cite self-critical
Soviet studies in order to illuminate Russian percep-
tions and problem-solving approaches.

I am deeply indebted to Murray Feshbach, Louvan
Nolting, Joseph Berliner, and Herbert Levine for sharing
their expertise on the USSR and for offering helpful
criticisms, comments, and suggestions. I am equally
grateful to the Soviet members of the Science Policy
Working Group for the opportunity to interact in this
common effort to enhance our mutual knowledge and under-
standing of the other's system, though we may disagree
in our views and conclusions.

My warm thanks also go to my American colleagues on
the Working Group for providing me with a tremendous
learning experience and "short course" on US R&D plan-
ning and management that proved invaluable in preparing
the chapter on comparative American and Soviet approach-
es to S&T policy. Special thanks in this regard are due
to Nat Robertson, Bill Carey, and Lowell Steele for
their analytical leads and thoughtful advice.

xi

Lastly, I also wish to thank Deborah C. Andrews for
editing the manuscript and making it far more readable
than it otherwise would have been.

Paul M. Cocks
August 22, 1980

xn

VII BACKGROUND AND APPROACH TO SCIENCE POLICY

IN THE USSR

Science policy in the USSR, as in the United
States, is significantly shaped by its national con-
text. While American science and engineering reflect
the conditions of a competitive market economy and
pluralist politics, Soviet R&D takes place against
the background of a centrally planned economy and
society. The differences between the two countries
in science and technology, however, go beyond the
differences between capitalism and communism as po-
litical ideologies and systems of government. Even
before the Bolshevik Revolution in 1917, Russia had
a pattern of scientific, educational, and industrial
development that was different from that of Western
Europe and the United States. The role of the state
in running society had always loomed much larger and
the autonomy of individuals and institutions was ac-
cordingly much more constrained. The evolution of
the organizational structure and mechanisms of R&D
in the USSR has been a complex process shaped by a
mixture of factors. Current policies and practices
reflect not only distinctive Soviet influences but
also the continuing effects of inherited Russian
scientific traditions and patterns. An awareness of
these elements of continuity is essential to under-
standing the nature of R&D planning and management
in the USSR today as well as the basic dissimilari-
ties between the Soviet and American approaches.

THE SOVIET COMMITMENT TO SCIENCE AND TECHNOLOGY

No government has been as explicitly committed to
science and technical progress as that of the USSR.

The Soviet Union was the first nation to recognize
science as a natural resource, to commit systemati-
cally large shares of its budget to the promotion of
research, and to try., to plan the development of sci-
ence and technology.

Kremlin leaders see their ideology as being syn-
onymous with science, and they have long regarded the
latter as an indispensable tool for modernizing Rus-
sia. The early Bolsheviks believed that science
would "conquer Russia both as a state of mind and as
a state of nature." Lenin's definition of Communism
as "Soviet power plus electrification of the whole
country" captures well the enthusiasm of the times
for science and technology during the formative stage
of Soviet rule. More than half a century later,
Leonid Brezhnev reaffirmed this basic commitment on
the 250th Anniversary of the USSR Academy of Sciences
"Socialism and science are indivisible," he empha-
sized. "Only by relying on the latest achievements of
science and technology is it possible to build so-
cialism and communism successfully."

Throughout the period of Soviet rule, Kremlin
spokesmen have tended to claim practically unlimited
potentialities for science. Indeed, the regime has
gone through a long line of technological panaceas
upon which, at one time or another, everything was
supposed to depend — electrification, mechanization,
chemicalization, etc. Today the "technological fix"
appears to be centered on computerization and auto-
mation. This almost eternally optimistic attitude
of the government and society toward science as a
progressive force of great untapped potential re-
flects the scientific optimism to which Marxism was
heir. In fact, a defense of science in 18th century
enlightenment terms, Loren Graham observes, is prob-
ably more popular today among intellectuals in the
Soviet Union than in Western states, where the ap-
peal of this model has diminished. Moreover, the
USSR Academy of Sciences is the only one of the 18th
century European academies of sciences which still
dominates the science of its nation.

The importance attached to scientific and techni-
cal progress in Soviet ideology has encouraged the
acceptance of large expenditures on R&D, especially
in the postwar period. The rate of growth of expend-
itures on science for the past 25 years, in fact, has
outstripped the rate of increase of both national in-
come and industrial production. Unlike the United
States, there has been no "flight from science" dur-
ing the past decade. While allocations for R&D rose
in the US to 2.5 percent of the GNP in 1965 and have
fallen ever since, official expenditures on science
as a portion of national income have risen in the So-
viet Union from 1.3 percent in 1950, to 2.7 percent
in 1960, to 4.8 percent in 1975. If we add develop-
ment activity at the enterprise level, which is not
included in "official" science figures, then the to-
tal share of national income has probably been about
7 or 8 percent throughout the 1970s. While official
allocations for science have tended to stabilize in
recent years at around 5 percent of the national in-
come, this rate is still significantly higher than
that of any nation in the Western world.

At the same time, certain tensions and conflicts
between science and ideology impede scientific and
technological developments. The commitment to sci-
ence is "conditional." The Soviet government, like
its Tsarist predecessor, has been ambivalent toward
science. On the one hand, it sees science as indis-
pensable for economic modernization and for enhancing
Soviet military power; on the other hand, the regime
distrusts the scientific spirit with its critical at-
titude towards authority and individualistic approach
to problem-solving. The evolution of science as an
autonomous social activity carries the dangers of
professional exclusiveness, elitism, and the asser-
tion of rationalistic modes of thought. Manifesta-
tions of dissent in recent years among scientists
testify to the reality of these dangers and make ide-
ological problems a continuing basic concern of So-
viet science policy. Dzherman Gvishiani, a deputy
chairman of the USSR State Committee for Science and
Technology, emphasizes that "all socialist states
cannot but grant great significance to the mastering

by scientists of Marxist-Leninist methodology, and
to the struggle against manifestations of bourgeois
ideology and bourgeois objectivism and subjectiv-
ism."

Political and ideological constraints have varied
over time, however. Under Stalin, control extended
to scientific theory itself, and particular inter-
pretations of theory were forced upon scientists. As
a result some scientific fields, like biology and
cybernetics, were deliberately suppressed or retard-
ed. The social sciences in particular have suffered
from the encounter with ideology. While the bound-
aries of intellectual freedom to pursue research have
been extended in the post-Stalin period, science has
not been freed from political influence. Soviet auth-
orities still make demands upon the scientists, al-
though frequently different ones than they made in
the past. Controls over scientists have not really
been relaxed, but the goals of such controls have
been redefined in accord with changing official per-
ceptions of national needs. Today it is the problems
of a more sophisticated society and industrial order
than those of the steel age of industrial expansion
that Soviet scientists andoengineers are under pres-
sure to address and solve.

CENTRALIZATION OF R&D PLANNING AND MANAGEMENT

The conduct of scientific research and development
in the USSR is subordinate, at least in principle and
aspiration, to strong central planning and manage-
ment. R&D shares this characteristic with other
broad areas of economic and social activity in a sys-
tem wherein the vast majority of the means of produc-
tion is owned and managed by the state. Accordingly,
it is impossible to distinguish between purely gov-
ernmental or public and purely industrial or private
sectors. Rather, there is simply one giant public
sector. At no point in R&D decision making is there
an apparent juncture of the kind visible in the Amer-

ican pluralistic setting when government policy im-
pacts on thousands of semi- independent private deci-
sion makers. Rather, the transition in the Soviet
Union from central policy to individual decisions
follows a continuum.

Given the particular shape and ethos of the system
the claim is frequently made in Moscow that Kremlin
leaders are able to pursue a comprehensive and coher-
ent national science and technology policy, and this
is the image of Soviet policy that generally exists
abroad. It contrasts sharply with the situation in
the United States where there is no formal, broadly
based, and unified policy for R&D (especially outside
of defense and space) but rather a confusing mixture
of policies, a diffusion of responsibility, and a
fragmentation of administration.

At the outset, however, it is important to empha-
size that this popular Western image of a tightly
centralized and coordinated Soviet S&T effort has
never corresponded with reality. Central planning
and management of R&D is still highly imperfect. S&T
planning has always been much more rudimentary than
economic planning. Although much more centralized
and comprehensive than the American system, the So-
viet approach is far from the holistic model that it
is sometimes portrayed to be. The Kremlin's reach in
science policy continues to exceed its grasp. Aspira-
tions outdistance capabilities. There are still many
holes in the whole. The interplay of multiple agen-
cies with diverse perspectives, different wills, and
competing interests continues to constrain the ac-
tions and to limit the capabilities of central auth-
orities to formulate and implement coherent policies
in science and technology.

To be sure, the idea of central planning of sci-
ence was established early in the life of the Soviet
regime. Centralization of R&D was regarded not only
as a means of eliminating the duplication of effort
and secrecy that were characteristic of capitalist
states but also of making the most effective use of
Russia's scarce S&T resources. Tradition as well as

ideology fed the propensity for central planning.
Throughout Russian history, science and education,
with only a few exceptions, had been subject to cen-
tral, state control. Private initiative was resented
by the rulers of imperial Russia in any field, includ-
ing science and learning. In any case, the Soviet
Union became in the 1920s the first nation in history
to attempt to formulate a policy towards science and
technology as a whole. It began conducting statisti-
cal and organizational surveys of scientific person-
nel and institutions a decade before other countries,
including the United States.

Despite all the talk about science planning and
policy during the twenties, however, little action
was actually taken in this direction. The first na-
tional conference on planning of scientific research
did not meet until 1931. A member of the Communist
Party was not elected to the Academy of Sciences un-
til 1929, and only in the thirties did the scientific
affairs of the Academy begin to reflect Party desires.
Actually, the innovative posture of the government in
this policy sphere in the 1920s gave way to a sterile
approach under Stalin. From the early 1930s until
Stalin's death little was done about the formulation
of science policy and the planning of science. Though
research organizations, like all Soviet institutions,
drew up annual plans, these were not meaningful. Ser-
ious attention began to be given to the planning and
management of R&D only after the mid-1950s. By then,
the USSR, the initial pioneer in national science
planning, lagged behind a. number of Western industri-
al nations in this area.

Similarly, the search for one central coordinating
agency to oversee the development of science and tech-
nology was gradually abandoned by the mid-1930s. No
Commissariat of Science was ever created. Instead,
responsibility for R&D planning and management rested
for the next 20 years primarily with the industrial
commissariats and later ministries as well as several
central departments. Much like the American pattern,
the Soviet R&D effort was structurally and adminis-
tratively fragmented among multiple mission-oriented

agencies with conflicting jurisdictions and interests.
Though formal control existed at the all-Union level,
there was no effective coordination of policy at the
center. Basically, there were four main organiza-
tional actors in science and technology policy: the
USSR Academy of Sciences, the State Planning Commit-
tee, the industrial commissariats or ministries, and
the commissariats or ministries of education. Of these
four the most important was the Academy. While indus-
trial R&D was formally coordinated by the State Plan-
ning Committee, each ministry in reality looked after
its own research needs until 1957 when the minister-
ial system was substantially reorganized. "

Thus, national science planning and policy as such
is as much a postwar phenomenon in the USSR as it is
in the United States. The development of science and
technology began to be planned on a general state ba-
sis rather than on the level of separate institutions
only in 1949, when an annual plan for the introduc-
tion of new technology was formulated for the first
time. 13 Only in 1956, however, did the plans begin
to include assignments for scientific research. Sec-
tions on the financing of research and on the provi-
sion of materials and equipment were not added to the
plans for science and technology until 1962. Also at
this time plans for training scientific manpower be-
gan to be compiled. In 1967, for the first time, tar-
gets for the application of computer technology and
management information systems were included in the
annual plan for S&T. The following year the All-
Union Scientific and Technical Information Center
began recording all research projects in the country.
Efforts to develop a comprehensive plan for nation-
wide technical standards did not start until 1971.
The state registration of all experimental design
projects did not begin until 1973.

Moreover, the planning of science remained con-
fined to a one year time frame until the mid-1960s.
In 1966, for the first time, a list of 250-odd prior-
ity R&D problems was drawn up and included in the
five year macroeconomic development plan. Only toward
the end of the 1960s did systematic long-range (10/15

years) studies begin to be organized in scientific
forecasting and technology assessment on the develop-
ment of industrial branches and on national problems
such as the future fuel and energy balance, develop-
ment of the transport system, the use of metal and
lumber, and the provision of an adequate food supply.
Work on a "Comprehensive Development Program for Sci-
ence and Technology and Its Social and Economic Con-
sequences" up to 1990 started in 1972, and a draft of
this program was largely completed by the fall of
1975. The issue of ecological development has only
recently become an object of central planning. Thus
the current Tenth Five Year Plan (1976-1980) includes
for the first time a separate chapter on the rational
utilization of natural resources and environmental
protection.

Organizationally, too, the first real step towards
an overall coordination of R&D was taken only in 1961
with the creation of the State Committee for Coordi-
nation of Scientific Research. In 1965 this body was
reorganized into the present State Committee for Sci-
ence and Technology. Taken together, then, all these
measures give substance to the statement by Gvishiani
in early 1972 that "the various forms of state activ-
ity in the sphere of science are, on the whole, still
in the formative stage. While some of them have been
applied for decades, others have emerged relatively
recently."1^

Inspite of some advances, however, the Soviet S&T
establishment remains highly deficient as a model of
effective systems planning, management, and control.
Research and development continues to be housed in a
myriad of institutions and fenced off by strong de-
partmental barriers that slow and impede the innova-
tion process. Efforts to strengthen integrating
structures and functions have met with only partial
success. The whole system still bears the heavy
chalk marks left by the branch ministries and cen-
tral agencies which participate in and share respon-
sibility for science policy.

8

It is important to stress that Kremlin authorities
have not abandoned their basically centralized ap-
proach and holistic perspective toward science policy,
even in face of the growing size and complexity of
their R&D effort. On the contrary, a perceived need
to accelerate science and technology has led them to
press all the more strongly in the 1970s for new tech-
niques of systems planning and management . Their com-
mitment to central planning remains firm. "The scale
and complexity of these problems," says Gvishiani,
"are such that in present-day conditions they can be
tackled only on the level of state policy. "^5

Today, modern systems technology and terminology
have become the fashion of the times in Soviet dis-
cussions of science policy. The new systems movement
and management mentality are very much in keeping
with the conventional centralized approach to sci-
ence policy. At the same time, however, the new sys-
tems rhetoric continues to suggest an image of unity,
coherence, and wholeness that are still lacking in
reality.

THE SEPARATION OF SCIENCE AND INDUSTRY

Science and industry in the USSR have always been
largely separate worlds, more coexisting apart than
mutually cooperating and pulling in the same direc-
tion. They are, to use Pravda' s recent imagery, like
"two flagships proceeding on different courses, in
different seas. "16 Or, to phrase the analogy slightly
differently, they often appear like two ships "pass-
ing in the night," unaware of the other's presence
and activity. This basic and persistent feature of
the system forms an essential background to an under-
standing of the Soviet situation, especially the ser-
ious interface problems involved in technological de-
velopment and delivery.

On the one hand, a bias in favor of theoretical
work pervades the world of scientific research and

9

development. Lacking usually their own experimental
facilities and generally neither rewarded nor penal-
ized for the success or failure of their results, re-
search scientists and design engineers tend to do
their work with little reference to its practical ap-
plication. Development work does not usually hold
the excitement and drama of fundamental research,
particularly in the civilian sector. Soviet higher
educational establishments offer practically no spe-
cialization for designers and technologists. The no-
tion that "small is beautiful" remains overshadowed
by an infatuation with "big science" and "big tech-
nology."

Historically, too, Russian science has been known
for its strong theoretical orientation. Its greatest
figures were theoreticians, such as M. Lomonosov and
D. I. Mendeleyev in chemistry, P. N. Lebedev in phys-
ics, and N. I. Lobachevsky and P. L. Chebyshev in
mathematics. In contrast to American culture little
place or prestige was given to the practical tinkerer
and innovator, much less the technological entrepre-
neur. The Imperial Academy of Sciences, from the time
of its foundation in 1725, was primarily theoretical
in orientation and relatively isolated from industry.
The continuing predominance of the Academy as the or-
ganizational center of Soviet science assures the
theoretical bias of the national scientific tradi-
tion. In general, both pre- and post-revolutionary
scientific R&D have not affected contemporary econo-
mic life significantly. 17

Since the earliest days of Soviet rule efforts
have been made to bring science closer to practical
matters and social concerns. Scientists have been
constantly instructed to serve socialism and to help
solve problems facing society and the economy. The
R&D establishment has been repeatedly reorganized to
achieve a better coupling between research and pro-
duction. Nonetheless, the translation of scientific
ideas into use remains a major problem to this day.
The bias of the official ideology and of the regime
for applied science and technology still acts as an
ineffective corrective to older entrenched scientif-
ic traditions.

10

Industry, on the other hand, has traditionally had
a strong production bias and discriminates against
new technology "like the devil shies away from holy
water," to use Brezhnev's words. 1° The short time
horizon of planning, the general low quality of pre-
production work, the absence of adequate in-house R&D
services, and all the uncertainties surrounding ma-
terial supply and financing for new technology tend
to make enterprise managers concentrate on current
production operations and minimize the rate of inno-
vation. Given the balance of relative risks and re-
wards, they find it more advantageous to expand ex-
isting production lines than to establish new prod-
ucts and processes. In short, the present invariably
drives out the future. 19

The weakness of applied R&D can also be traced to
historical and structural factors. Industrial re-
search was largely lacking in prerevolutionary Rus-
sia, which derived much of its technology and indus-
trial capital from the West. The Soviet regime de-
cided early to organize and promote applied scien-
fic R&D in specialized institutes subordinate direct-
ly to the industrial commissariats. The creation of
such large, central institutes serving particular
branches of Soviet industry as a whole rather than
individual plants, it was believed, would build a
more effective industrial research establishment than
in capitalist states where R&D was fragmented among
numerous firms which competed with each other and
concealed their innovations if possible. 20

Since the mid-1960s this pattern of insulating
R&D from the normal economic processes has been sub-
ject: to mounting criticism. Although the separation
of science from production was once seen as playing
a positive role in allowing the USSR to develop a
strong and autonomous research sector unfettered by
excessive industrial claims and demands, it is now
perceived as contradicting the interests of both
science and production. Today, science, technology,
and production are said to be increasingly interact-
ing and interdependent processes that develop not in
isolation and by themselves but through their linkage

11

with one another. The coupling processes must ac-
cordingly be organized "so as to achieve a fast and
effective flow of scientific and technological ideas
into industry and an equally fast and effective coun-
terflow of orders from industry to science." Only by
building better structural crosslinks can production
be made "to soak up new scientific ideas like a
sponge."22 While the interactions between science
and industry have indeed become more direct and com-
plicated in recent years, organizational and motiva-
tional bonds have not yet been formed that are capa-
ble of breaking down the barriers separating these
two worlds.

The strong military orientation of scientific R&D,
along with the secrecy that surrounds it, has con-
tributed to the underdevelopment of industrial tech-
nology. Much like the United States, the Soviet re-
gime has spent enormous sums on defense, aerospace,
and nuclear R&D while under investing in industrial
R&D. Nor has there been any substantial spin-off
from these national security and high technology re-
lated projects in terms of civilian applications to
national needs and improvements in the quality of
life. The resulting pattern has been a high con-
centration of talent and money in defense and space
and a seriously distorted deployment of S&T resources,
This pattern is not new to the Kremlin. A preoccupa-
tion with defense technology and the political-mili-
tary orientation of the state-directed effort are
deeply rooted in Russian history. From the time of
Peter the Great Tsarist governments were interested
in applying technology largely to military purposes.

Still another thread of continuity in the Russian/
Soviet complex of science and technology deserves
mention: the role of external influences in Russia's
development. Throughout its history, Russia's scien-
tific and technical ties with foreign countries, es-
pecially the Western world, have been limited and in-
termittent, if at times quite energetic. Internal
regime attitudes, Tsarist and Soviet, have fluctuat-
ed between two extremes. At times the government re-
sorted to artificial and imposed isolation. At other

12

times, it actively sought international cooperation
and exchange. Since Russian science was tradition-
ally in advance of Russian technology, the breakdown
of foreign contacts tended to intensify, in particu-
lar, Russia's technological lag. 23 Consequently, the
government would periodically rely upon heavy doses
of imported foreign technology to strengthen its mil-
itary power and to help overcome Russia's economic
and technological backwardness. From this perspec-
tive, Moscow's intensified efforts in the 1970s to
expand scientific cooperation and technology trans-
fer, especially with the nations of Western Europe
and the United States, should be seen as part of an
older tradition and development strategy.

TWO SYSTEMS FOR GUIDING TECHNICAL PROGRESS

As a result of the particular course followed by
the Soviet Union in science, technology, and economic
growth essentially two systems have evolved for guid-
ing technical progress. The primary line of influence
is the basic economic system. This structure was cre-
ated in the prewar years and evolved in response to
the demands of rapid industrialization. Science and
technology did not provide the principal motive force
for its operation. Bearing a strong ant i- innovation
bias, this system remains fundamentally oriented to
the expansion of existing patterns of production and
technology. A secondary line of influence is exer-
cised by a special set of structures and mechanisms
which began to take shape around the mid-1950s with
the burgeoning growth of the Soviet R&D effort. This
supplementary system attends to the problems of sci-
ence and technology policy and performance. Accel-
eration of the rate of innovation is one of its main
goals. Each system has its own plans, budgetary
practices, incentive schemes, and integrating admin-
istrative organs. Typically, however, there is lack
of coordination between the basic and supplementary
systems. Indeed, they frequently work at cross pur-
poses to each other.

13

In general, the focus of Soviet S&T policy in the
1970s centered largely on how to improve these two
guidance systems. As regards the supplementary ma-
chinery, some elements are still lacking. Among them
are effective procedures and organizational solutions
for creating and applying new technology that involves
the joint cooperation of multiple ministries and agen-
cies. Second, some elements of the supplementary sys-
tem, such as the policy of pricing new technology,
need to be improved. Third, the separate parts of
this system are not well coordinated. Finally, the
supplementary system for scientific research, devel-
opment, and innovation needs to be better integrated
with the general system of economic planning and man-
agement. Controversies abound over how to solve
these problems. 24 As yet, no grand systems solution
has been found, though the search goes on. We can be
sure, then, that these issues will continue to occupy
a prominent place on the Kremlin's S&T agenda for the
1980s (see chapter 12) .

In sum, these are some of the basic features and
underlying traditions of the contemporary science and
technology establishment in the USSR. An awareness
of them adds to our understanding of particular So-
viet patterns and problems of organizing, planning,
and managing R&D, which are discussed in more detail
in the following pages.

14

FOOTNOTES

1. Loren R. Graham, "The Development of Science
Policy in the Soviet Union," in T. Dixon Long and
Christopher Wright, eds., Science Policies in Indus-
trial Nations (New York: Praeger Publishers, 1975),
p. 13.

2. Ibid., p. 19.

3. Prayda, October 8, 1975.

4. Loren Graham, "The Place of the Academy of Sci-
ences in the Overall Organization of Soviet Science,"
in John R. Thomas and Ursula M. Kruse-Vaucienne, eds.,
Soviet Science and Technology: Domestic and Foreign
Perspectives (Washington, D.C.: George Washington Uni-
versity, 1977), pp. 44, 56. See also Raymond Hutch-
ings, Soviet Science, Technology, Design: Interaction
and Convergence (London and New York: Oxford Univer-
sity Press, 1976), pp. 116-119.

5. E. I. Valuev, L. S. Glyazer, V. P. Groshev, V.
I. Kushlin, M. P. Kokonina, G. A. Lakhtin, V. G. Leb-
edev, Yu. K. Petrov, S. V. Pirogov, and S. M. Ryumin,
"Osobennosti f inansirovaniya nauki v SSSR (Unique
Characteristics of the Financing of Science in the
USSR)" (Moscow, December 1976), p. 7. Report prepared
for the US-USSR Joint Working Group in the Field of
Science Policy, Subgroup IV: Financing of Research and
Development.

6. See Julian N. Cooper, "The Organization and Plan-
ning of Research and Development in the USSR," Paper
prepared for the Conference on Technology and Commu-
nist Culture, Bellagio, Italy, August 22-28, 1975. See
also Alexander Vucinich, Science in Russian Culture,
1861-1917 (Stanford, California: Stanford University
Press, 1970), p. xi.

7. D. M. Gvishiani and A. A. Zvorykin, eds., Osnov-
nyye printsipy i obshchiye problemy upravleniya naukoi
(Moscow: Nauka, 1973), p. 39.

15

8. Graham, "The Development of Science Policy in
the Soviet Union," pp. 38-41.

9. Ibid., pp. 12-13, 22-23.

10. Ibid., pp. 23-24, 27-29.

11. E. Zaleski, J. P. Kozlowski, H. Wiennert, R. W.
Davies, M. J. Berry, and R. Amann, Science Policy in
USSR (Paris: Organization for Economic Cooperation
and Development, 1969), p. 25.

12. Graham, "The Development of Science Policy in
the Soviet Union," pp. 29-30.

13. Prior to this time, the USSR and republic state
planning committees and the USSR and republic acade-
mies of sciences did little more than tabulate re-
search plans submitted by performing institutions.
They made no effort to pass on priorities, to coordi-
nate the plans and to eliminate duplication, or to
link them to national and branch plans for industrial
production and capital investment. Before 1949 no
consolidated plan sections for R&D existed in the gen-
eral annual and five year plans for development of the
national economy. Though expansion of production fa-
cilities entailed planning new technology, most of the
technology was acquired from abroad and the planning
was submerged in the production plans of branches and
enterprises. See Louvan E. Nolting, The Planning of
Research, Development, and Innovation in U.S.S.R,
U.S. Department of Commerce, Foreign Economic Reports,
No. 14 (Washington, D.C., 1978), p. 7.

14. D. M. Gvishiani, "Centralized Management of Sci-
ence: Advantages and Problems," Impact of Science on
Society, XXII (January- June 1972), p. 97.

15. D. Gvishiani, "The Scientific and Technological
Revolution and Scientific Problems," Social Sciences
(Moscow), I (7) (1972), p. 47.

16. Pravda, July 3, 1977.

16

17. Hutchings, Soviet Science, Technology, Design,
pp. 4-5. See also Ronald Amann, "The Soviet Research
and Development System: The Pressures of Academic tra-
dition and Rapid Industrialization," Minerva, VIII
(1970), pp. 221-224.

18. Pravda, March 31, 1971.

19. For the best discussion of the problems of in-
novation, see Joseph Berliner, The Innovation Decision
in Soviet Industry (Cambridge, Massachusetts: MIT
Press, 1976).

20. Graham, "The Development of Science Policy in
the Soviet Union," pp. 25-27. See also his excellent
essay, "The Formation of Soviet Research Institutes:
A Combination of Revolutionary Innovation and Inter-
national Borrowing," Social Studies of Science, No. 5
(1975), pp. 303-329.

21. L. S. Blyakhman and A. F. Ivanov, "Nauchno-pro-
izvodstvennoye obedineniye kak forma sistemnoi organ-
izatsii tsikla issledovaniye-proizvodstvo," Izvestiya
Akademii nauk SSSR, seriya ekonomicheskaya, 6 (1971),
p. 39.

22. V. G. Afanasyev, Nauchno-tekhnicheskaya revolyu-
tsiya, upravleniye, obrazovaniye (Moscow: Politizdat,
1972), pp. 26-27, 312-313.

23. See the discussion by Hutchings, Soviet Science,
Technology, Design, pp. 9-11 and the three volume
study by Anthony C. Sutton, Western Technology and So-
viet Economic Development, 1930-1965 (Stanford: Hoover
Institution Press, 1971-1973).

24. On these two guidance systems, see G. Kh. Popov,
Effektivnoye upravleniye (Moscow: Ekonomika, 1976) ,
pp. 128-136.

17

VIII THE ORGANIZATION OF R&D

OVERALL STRUCTURE AND INSTITUTIONAL SETTING

In keeping with the Kremlin's basically central-
ized approach to science policy, the organization
and conduct of R&D in the USSR are highly structured
along strong hierarchical lines. Soviet authorities
attempt to plan and manage the research-to-production
process as a single unit. Accordingly, the institu-
tional structure that has been created to promote the
process is regarded as an integrated "organizational
system" with relatively detailed formal roles and re-
sponsibilities assigned to the vast array of individ-
ual actors and special agencies that make up its con-
stituent parts.

Generally speaking, as many observers have noted,
the overall institutional framework resembles the in-
ternal organization of a large business enterprise
that operates on mainly three levels (Figure 9-1) . At
the top or apex of the pyramid is the corporate "head-
quarters" that includes the chief executives and their
main staff assistants and offices. Their task is to
develop broad strategy and to set organizational pol-
icy and procedure. In the USSR the central decision
making authorities include both Communist Party and
governmental units at the all-union or national level
as well as the republic level. There are also what we
may term "functional" agencies which are responsible
for the formulation, coordination, and monitoring of
policy in a given area for all establishments in the
economy. Most of these agencies are designated
"state committees" and report directly to the central
governmental policy-making organs. Such functions as
planning, finance, and supply are the responsibility
of bodies of this type.

18

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Below this top governing structure, on a second
level, are the specialized and relatively autonomous
"product" divisions and "line" agencies which are re-
sponsible for directing all activities of a collec-
tion of performing establishments which operate in a
particular area. In the Soviet context there are
three such major divisions or institutional subsys-
tems. Each tends to concentrate on specific stages
of the R&D process. Academies of sciences special-
ize in basic research while industrial branch minis-
tries focus on applied research, design, development,
and production assimilation. The Ministry of Higher
and Specialized Secondary Education constitutes the
third performing network and includes universities
and independent R&D facilities. Such organizations
engage in fundamental or applied research, depending
upon the orientation of the facility or individual
researcher. Finally, at the base of the structure
are the individual units which actually conduct re-
search, development, education, and production ac-
tivities.

At each level operating policy tends to be set
with the direct or indirect participation of the
functional agencies in their respective domains. The
nature and role(s) of pertinent specific or generic
types of organs noted in Figure 9-1 are described
briefly in the following discussion.

To be sure, the highly centralized pattern of or-
ganization and conduct of R&D is the most distinctive
feature of Soviet science policy. This characteris-
tic also clearly distinguishes the Kremlin's approach
from the American format. However, our understanding
of the basic functioning and fundamental problems of
scientific R&D in the USSR will be imperfect if we
see only the dominant hierarchical lines of the for-
mal organizational blueprint.

Though strongly centralized, the Soviet system is
far from being a monolith. The institutional world
of R&D is, indeed, a highly complex and compartmen-
talized structure. Power is dispersed and authority
is divided among a myriad of organizational centers.

20

In 1972, for example, nearly 140 ministries on either
an all-union or union republic level had under their
jurisdiction R&D establishments. *■ This fragmented
administrative structure, in turn, influences — if not
dictates — the fundamentally bureaucratic character of
science policy making and implementation. Adhering to
the principle that "science cannot be administered
exclusively from a single center," Kremlin authori-
ties emphasize the joint realization of planning and
management functions. 2 That is, the basic modus ope-
randi in Soviet R&D revolves around joint decision
making, power sharing, and cooperative actions in a
multi-organizational context.

To a large extent, the overall structure itself
generates certain "pluralist" forces and tendencies
in Soviet R&D. Though admittedly of a different kind
and degree than in America, organizational pluralism
exists and exerts substantial influence on the policy
process. The research-to-production cycle must pass
through a variety of decision paths and clearance
points. Disagreements and delays over choices and
strategies occur at every turn. Cooperation is
achieved and maintained with great difficulty. Noth-
ing works smoothly. Given this context, a heavy
burden falls particularly on those agencies responsi-
ble for coordinating R&D. As the principal referees
and synthesizers, they are the ones who must develop
and display effective managerial abilities in balanc-
ing mixed coalitions of opinion, criticism, and advo-
cacy in the pursuit of national goals.

While these behavioral features of Soviet R&D
planning and management are treated in more detail
in subsequent chapters, we mention them here because
they are largely rooted in and shaped by organiza-
tional factors. Moreover, structure per se is inher-
ently static. In any brief description of formal in-
frastructure it is easy to lose sight of the organi-
zational dynamics around which the whole machinery
turns.

It is also important to note that the Soviet S&T
establishment has evolved over several decades. There

21

is no evidence that the distribution of power among
the central agencies concerned with administering R&D
has changed significantly during the last 10 years.
At the performing level, on the other hand, consider-
able experimentation and some change have taken place
in the organization of R&D in this interval. In gen-
eral, though, institutional continuity and stability
have been distinct hallmarks of Soviet science and
technology.

At the same time, science analysts and political
leaders in Moscow have begun increasingly to take a
second look at basic organizational approaches in re-
sponse to complaints that R&D institutions suffer
from too much stability, that they have become struc-
turally rigid and unresponsive to changing conditions
and new demands. Subsequently, some efforts are un-
derway to create new, or at least modified, institu-
tional arrangements and more effective organizational
forms linking and integrating the innovation process.
We return to a discussion of these contemporary or-
ganizational issues in the final part of this study.

For the moment, our task is to present the formal
organizational chart and to outline the main entities
managing and supporting Soviet research and develop-
ment. This panoramic sketch helps orient subsequent
discussions of the formulation and implementation of
R&D plans. The latter, in turn, provide explanations
of the terminology employed in the brief descriptions
of the roles of the participating organizations.

THE TOP GOVERNING MACHINERY

All threads of decision making in science policy,
as in other major issue areas, come together at the
peak of the Soviet political pyramid. Though power
tends to be highly concentrated, there is, even at
the top, structural and functional differentiation,
which is reflected in separate institutions charged
with executive, legislative, and administrative func-

22

tions. Thus, the organization of authority continues
to take the form of an intricate, weblike structure
of specialized agencies, divided responsibilities,
and complex relationships.

Central Policy-Making Organs
At the Ail-Union and Republic Levels

Policy-making authority is formally exercised by
three organs at the all-union and republic levels.
These are (1) the leadership elements of the Commu-
nist Party, at the all-union level the Central Com-
mittee and its elected Politburo and Secretariat;
(2) the legislative organ, at the all-union level the
Supreme Soviet; and (3) the Councils of Ministers.
The authority wielded by the Party derives from its
status as the only ruling party and sole repository
of legitimacy in the system rather than from any for-
mal responsibility within the Soviet governmental hi-
erarchy. The highest organ of state authority, as
specified in the Soviet constitution, is the Supreme
Soviet, while the USSR Council of Ministers, report-
ing to the Supreme Soviet, is the central administra-
tive organ of the government. There are counterpart
bodies for the Supreme Soviet, the Council of Minis-
ters, and the Central Committee of the Party in each
of the 15 republics of the Union* with the exception
of the Russian Soviet Federated Socialist Republic,
where there is no republic Central Committee.

This general tripartite division of institutions
and functions, however, should not be taken to imply
a genuine separation of powers or checks and balances
along American lines. In actuality, it has always
been clear that final authority in the USSR rests
with the Communist Party and its own executive ap-
paratus. The legislative and executive branches of
government are of secondary importance in the formu-
lation of fundamental policy, and, sometimes, in de-
_ _

These are the Russian, Estonian, Latvian, Lithu-
anian, Belorussian, Ukrainian, Moldavian, Armenian,
Georgian, Azerbaidzhan, Kazakh, Turkmen, Tadzhik,
Uzbek, and Kirgiz Soviet Socialist Republics.

23

ciding even operational questions. Though a more ra-
tional division of decision making responsibility has
recently evolved, the real political bargaining over
basic policy still occurs within the executive organs
of the Communist Party.

The Communist Party of the Soviet Union (CPSU)

Although the Party has no formal responsibility in
R&D planning and management, the de facto authority
of the Party is extensive. The highest organs of the
Party — the Politburo and the Secretariat — generally
are acknowledged to be, respectively, the leading de-
cision-making body and chief executive arm in the So-
viet Union. The Politburo defines national priori-
ties and determines the broad contours of policy for
the economy, science, and technology. Directives of
the Politburo, in turn, are reflected in the policy
deliberations and formulations of the USSR Council of
Ministers; indeed, questions of fundamental impor-
tance are decided jointly by the Central Committee
and the Council and are published as joint decrees.
As evidence of the close working relationship between
the Party and government leadership elements, virtu-
ally all members of the USSR Council of Ministers are
also members of the Central Committee and, in some
cases, also of the Politburo.

The Central Committee Secretariat is the chief ex-
ecutive body of the Party charged with operational
coordination and day-to-day decision making. The Sec-
retariat reserves the right to intervene in the work-
ings of the ministries and other government agencies
to enforce priorities. Its Department of Science and
Higher Educational Institutions exercises broad over-
sight responsibilities in science-related matters. In
addition, this department has been a major training
ground for high level science and educational admin-
istrators. For example, M. A. Prokofiev, the Minis-
ter of Education, was at one time its head as was
V. A. Kirillin, the Chairman of the State Committee
for Science and Technology. Other departments of
the Secretariat that appear to play important roles
in S&T policy are those of Defense Industry, Heavy

24

Industry, Chemical Industry, and Planning and Fi-
nance. In general, though, pur knowledge of the na-
ture and distribution of functions within the appa-
ratus of the Central Committee in this policy sphere
is very limited.

It is clear that considerable influence is exer-
cised by the Party machinery through its general con-
trol of personnel selection. All major appointments
in scientific and educational institutions are first
screened and approved by the Central Committee or its
local counterparts, depending upon the significance
of the post.

Below the level of the Central Committee, Party
organization to a large degree parallels the organi-
zation of the government and economy. Party organs
are established on a territorial basis (republic*
province, and city). Party cells or at least repre-
sentatives are also created in all significant per-
forming establishments. Down the hierarchies of pub-
lic administration, Party officials supervise and
penetrate the legislative and executive organs of
government, in a complex pattern of cooptation and
interdependence. A principal reason for this kind
of organizational arrangement is to enable Party
authorities to monitor economic and technical plan-
ning and performance through channels independent of
the government hierarchy and, when necessary, to fa-
cilitate plan fulfillment with such measures as Party
assistance in resource allocation.

In general, Party organs have a pronounced impact
on science policy formulation and implementation,
particularly at the highest levels of the Party.
While the informal or unstated nature of the impact
renders it difficult to document systematically, the
Party remains a potent force.

The Supreme Soviet of the USSR

The Supreme Soviet is the highest legislative body
in the Soviet government. About 1500 deputies are
elected to this "parliament," usually every five

25

years, from among the "leading elements" of Soviet
society. As. a general estimate, about 35 percent of
the deputies are "outstanding" workers and peasants
by occupation, 35 percent are Party officials and
government administrators, and the remainder are var-
ious kinds of professionals, including scientists and
engineers . Though membership in the Communist Party
is not required for election, about three quarters of
the deputies elected to the Supreme Soviet in 1974
were Party members. The internal organization of the
Supreme Soviet and the relationship of the Soviet to
the Council of Ministers is illustrated in Figure 9-2,

The Supreme Soviet generally meets in full session
no more than six to seven days a year. During these
sessions the deputies briefly discuss and approve
legislation formulated and presented by the Council
of Ministers and the Party Central Committee. Between
meetings, the authority of the Supreme Soviet is ex-
ercised by its Presidium. This body includes 39 mem-
bers: a chairman, a first deputy chairman, 15 deputy
chairmen (comprised of the chairmen of the supreme
Soviets of the 15 union republics), a secretary, and
21 ordinary members. Of the latter group elected to
the Presidium in 1974, 11, including Brezhnev and 5
other members of the Politburo and Secretariat, were
members or candidates of the CPSU Central Committee.
The composition of the membership again shows the in-
terlocking character of Party and government authori-
ties at the top of the political command structure.
The Chairman of the Supreme Soviet Presidium, it may
be noted, is referred to as the president of the USSR,
In June 1977 Leonid Brezhnev assumed this post in ad-
dition to his position as General Secretary of the
Party.

In general, the Supreme Soviet has great constitu-
tional authority but little effective political pow-
er. While the Soviet is officially the head of the
government, the sessions of the Soviet are too short
to permit meaningful deliberation of policy. Its pri-
mary concern is to legitimize and propagandize poli-
cies made elsewhere.

26

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27

The de jure functions of the Supreme Soviet rela-
ting to R&D planning and management include discus-
sion and approval of national plans and of legisla-
tion regarding the organization of state administra-
tion of science and technology. Overall, the in-
volvement— if not influence — of the Supreme Soviet
in policy making may have increased somewhat in 1966
with the creation of permanent standing commissions
for such matters as education, science, and culture;
planning and budget; industry; agriculture; and
transportation and communications. These commissions
have the formal authority to do the following:

1. Supervise activities of organs of state ad-
ministration in appropriate fields

2 . Make preliminary studies of appropriate sec-
tions of the national economic plan

3. Present findings on matters submitted for
their consideration

4. Initiate legislation and present it to the
full Soviet?

The Council of Ministers of the USSR

The Council of Ministers is the most powerful or-
gan of state administration and the final authority
on the organization of Soviet ministries. Composed
of nearly 100 members, the Council includes the heads
of the most important government agencies, and ex of-
ficio, the 15 chairmen of the councils of ministers
of the constituent union republics. With the excep-
tion of the latter group, each member of the Council
is responsible for administering specific sectors of
the nation's economic, political, military, or so-
cial-cultural life. His administrative domain may
include, for example, a branch of industry; a nation-
al level or interrepublic service, such as the run-
ning of the railroads; a functional area, such as
planning or finance; or such agencies as the Minis-
tries of Foreign Trade, Education, and Justice.

28

Ministries are basically of three kinds: all-
union, union-republic, and republic. All-union
ministries are established for sectors of national
importance and priority with no clear republic ori-
entation; examples are the chemical and aviation in-
dustries. These ministries, which are highly cen-
tralized in Moscow, directly administer activities
and facilities under their jurisdiction, regardless
of their geographical location. Union-republic min-
istries are- established for sectors where there is
significant intrarepublic activity. Union-republic
ministries may administer a few activities directly,
but they ordinarily operate through counterpart min-
istries bearing the same name in each of the repub-
lics. Thus the USSR Ministry of Health transmits its
directives for implementation by the ministries of
health in each republic. Legally, union-republic
ministries in the republic are responsible to the re-
public councils of ministers and legislative organs
as well as to their parent ministry in Moscow. Exam-
ples of union-republic ministries with counterpart
ministries in all republics are Agriculture, Con-
struction Materials, and Culture. Examples with min-
istries in only selected republics are the Coal In-
dustry and Ferrous Metallurgy. Republic ministries,
the third type, generally are concerned with ser-
vices, such as automotive transport or local indus-
try. Republic ministries are not represented in the
USSR Council of Ministers, but operate under the im-
mediate supervision of the councils of ministers and
legislative organs of the individual republics.

Chairmen of state committees sit on the USSR Coun-
cil of Ministers and are accorded the same status as
ministers. State committees deal primarily with mat-
ters that cut across the jurisdictions of convention-
al departments. Those prominent state committees,
which significantly influence the development of
science and technology, include:

1. The State Planning Committee (Gosplan)

2. The State Committee for Science and Tech-
nology (GKNT)

29

3. The State Committee for Material and Technical
Supp ly (Go s snab)

4. The State Committee for Construction Affairs
(Gosstroy)

5. The State Committee for Inventions and Dis-
coveries (Goskomizobreteniya)

6. The State Committee for Standards (Gos-
standart)

7. The State Bank (Gosbank)

8. The Central Statistical Administration (TsSU)

Other minor agencies of the Council whose activities
relate to science and technology are:

1. The State Committee for Utilization of Atomic
Energy

2. The Main Administration for Geodesy and Car-
tography

3. The State Committee on Hydrometeorology and
Environment

4. The Main Administration of Microbiological
Industry

5. The Committee for Lenin and State Prizes in
Science and Technology

Given the unwieldy size of the Council of Minis-
ters, cohesion and coordination are provided by its
Presidium, a kind of inner cabinet. The Presidium
includes the chairman, two first deputy chairmen, and
about 10 deputy chairmen. Among the deputy chairmen
are the heads of four state committees which inter-
face most importantly with S&T policy (the GKNT, Gos-
plan, Gossnab, and Gosstroy). The Chairman of the
USSR Council of Ministers is designated "Premier" and
is the effective, operational leader of the govern-
ment.

30

The Council of Ministers, as the principal policy-
making organ of the government, has general responsi-
bility for organizing and administering all scientif-
ic, technical, and production activities in the So-
viet economy. As illustrated in Figure 9-1, all
state facilities ultimately report to the Council.
Overseeing the critical planning function is a ma-
jor occupation of the Council. Plans for all sub-
ordinate organs and facilities are derived from the
national plan, which is inspired, prepared under the
guidance of, and approved by the Council of Minis-
ters. In the sphere of R&D planning and management,
the scope and breadth of the Council's ultimate auth-
ority are illustrated by the following Soviet enu-
meration of pertinent Council responsibilities:

1. General administration of R&D

2. Resolution of all questions concerning the or-
ganization and administration of R&D

3. Development of measures to improve the manage-
ment of R&D

4. Examination and approval of the "main direc-
tions" of R&D

5. Establishment of procedures for developing R&D
plans and for introducing research results in-
to the national economy

6. Development of the plan for S&T progress

7. Organization of S&T information

8. Finance of R&D

9. Resolution of questions on wages and working
conditions of scientists and engineers

10. Training of scientific and engineering person-
nel

11. Resolution of questions about copyright, pa-
tents, and laws on invention and discovery.

31

Each of these responsibilities forms the basic work-
ing orientation for one or more of the Council's
state committees or specialized agencies.

Policy-Making Organs of the Union-Republic
Governments

The governments of the union republics are pat-
terned after the central government establishment,
with a Supreme Soviet and a Council of Ministers in
each republic. As with the central government, real
administrative authority rests with the councils of
ministers and, ultimately, the republic Communist
Parties. The membership of a republic council of
ministers consists of the heads of about 30 republic
and republic-level union-republic ministries as well
as republic counterparts to state committees and oth-
er specialized agencies.

Republic ministries are directly the province of
the republic council of ministers. However, under
the principle of "dual subordination" a union-repub-
lic ministry or agency is subordinate to both its
respective republic council of ministers and its su-
perior ministry in Moscow. Figure 9-3 illustrates
the interrelationships between ministries and agen-
cies of this type and all-union and republic policy-
making organs. Note that each of the three types of
institutional hierarchies concerned with science and
technology — the academies of sciences, the industrial
branch ministries, and the ministries of higher and
specialized secondary education — is characterized in
part by conditions of dual subordination.

The republic councils of ministers have authority
over a broad range of issues pertaining to the di-
rection of scientific and technical progress in the
institutes and enterprises of the republic. Relevant
functions include:

1. Consideration of draft plans developed by the
central ministries for their subordinate or-
ganizations in the republic

32

FIGURE 8-3

ORGANIZATIONAL STRUCTURE OF SCIENCE POLICY
AT THE UNION REPUBLIC LEVEL

USSR Council of Ministers

USSR State Committee

for
Science and Technology

USSR
Academy of Sciences

State
State Planning Committee

Union Republic
Council of Ministers

Union Republic
Academy of Sciences

USSR Ministry of Higher
and Specialized Secondary
Education

Union Republic
State Planning Committee

Union Republic Ministry
of Higher and Specialized
Secondary Education

Union Republic
Ministries, Agencies, and Committees
for Management of the Union Republic
Economy by Branch

Links between union and union-republic organs
of administration and Che Academy of Sciences,
and organs of state administration in a union
republic

Links between organs of state administration
at the all-union and republic levels

Source: "USSR Short Answers," p. 2.

33

2. Submission of proposals to the USSR Gosplan
and Council of Ministers

3. Establishment of procedures for organizing
and administering scientific institutions of
the republic

4. Establishment of new scientific institutions

5. Allocation of funds for scientific institu-
tions

6. Coordination of republic activities with the
appropriate all-union agencies

7. Determination of the competence of union-re-
public administrative organs to which scien-
tific institutions are subordinate^

In general, the functions of the republic councils of
ministers resemble and complement functions of the
USSR Council of Ministers.

According to some Soviet science analysts, there
is much more diversity and greater deficiencies in
the organization, planning, and management of R&D on
the republic level than at the center. The plural-
ization of institutions and fragmentation of admin-
istration are more pronounced on the republic level
where there is no counterpart to the State Committee
for Science and Technology, except in Georgia. In
most republics, the leading role in R&D administra-
tion has passed to the republic state planning com-
mittee. Still there is no uniformity of procedure
or operation at this level. Even the name of the
special departments handling S&T matters at the gos-
plan and council of ministers varies from one repub-
lic to another, each reflecting its own particular
focus and priorities. Existing gaps and neglect, not
to mention conflicts, in the allocation and exercise
of R&D administrative responsibilities in the repub-
lics cause difficulties and delays in the organiza-
tion and flow of information to and from the Gorky
Street headquarters of the USSR GKNT in Moscow. In

34

the words of one Russian critic, the whole decision
process, becomes, "overloaded and frozen." According
to another, such an arrangement of structures and
functions contradicts the demands for an optimal
system of S&T planning and management."

Functional Agencies Engaged in R&D
Planning and Management

The role of state committees and other agencies
depicted in Figure 9-1 essentially is to manage a
subset of policy mechanisms on behalf of the Council
of Ministers of the USSR and the republic councils.
Administration of branch scientific and production
activities, which is the responsibility of the min-
istries, depends upon provision of a number of com-
mon services, such as planning, finance, and supply.
The Soviet leadership has chosen to concentrate pro-
vision of these services in particular state commit-
tees and functional ministries. Of these services,
planning has the most immediate and widespread im-
pact. Agencies concerned with planning of R&D and
related activities are the State Committee for Sci-
ence and Technology, the State Planning Committee,
and the USSR Academy of Sciences. Other agencies
manage complementary activities, such as finance and
supply, or specialized operations which support plan-
ning and management, such as the maintenance of stan-
dards. While there are few R&D and production facil-
ities administratively subordinate to these agencies,
the agencies have broad powers to establish proce-
dures and to issue binding orders on matters within
their competence. These orders significantly influ-
ence the operation of all facilities throughout the
Soviet economy.

The basic task of this network of functional in-
terbranch agencies is to coordinate the vast and di-
verse Soviet R&D effort. On paper, these organiza-
tions possess formidable powers to enforce central
priorities and to facilitate uniform S&T policies.
In practice, however, they frequently lack the auth-
ority and means necessary to perform their integrat-
ing functions. Instead of regulating developments

35

in their tangled branch constituencies, they are
themselves at times b.eing regulated and ignored. The
ministries do not always accept the recommendations
of these central agencies; instead, they pursue their
own ways and wishes.

To be sure, the actual workings of this machinery
of coordination are much more complex than implied
by the formal organization chart. The key to under-
standing Soviet policies lies not so much in the
structure of institutions as in the fundamentally bu-
reaucratic context in which they operate. The auth-
ority and activity of state committees are frequently
circumscribed. Caught in a constant cross fire of
pressures from competing and powerful organizations,
each promoting its own interests and R&D goals, the
committees find themselves challenged and constrained
at every turn. Given the nature of their overlapping
and shared responsibilities for R&D planning and man-
agement, the state committees are frequently forced
to seek the approval of and some kind of accommoda-
tion with various branch ministries, government de-
partments, and other state committees, not to mention
Party agencies. They are integral parts of a giant
maze of bureaucratic subsystems and circles of admin-
istrative confusion, rather than standing apart from
it. As a result the state committees are forced to
perform a continuous and difficult balancing act in
which national goals and priorities are reconciled
with the special interests of the numerous organiza-
tions that comprise and conduct the Soviet R&D ef-
fort. This process inevitably involves them in heavy
political conflict, bargaining, and compromise. Al-
though we still know little about the actual mechan-
ics of power and processes of negotiation within the
Soviet system, the reality of bureaucratic politics
and its imprint on science policy are unmistakable.

With these caveats in mind, we can now briefly
describe the formal functions of the major agencies
involved in R&D planning and management at the cen-
tral level. Discussion of the Academy of Sciences is
taken up in the next section, as the Academy combines

36

general planning and cqordina.ting activities with ad-
ministrative responsibility for a large number of R&D
facilities.

The State Committee for Science and Technology (GKNT)

Within this governmental structure the State Com-
mittee for Science and Technology occupies a pivotal
role. It acts as a "special balancing mechanism" for
the USSR Council of Ministers, providing cohesion and
coordination among the state committees and central
departments. ° That is, the GKNT is the agency that
bears primary responsibility for ensuring the formu-
lation and conduct of a unified S&T policy.

The GKNT, an all-union agency, was formed in 1965,
replacing the union-republic State Committee for the
Coordination of Scientific Research, Other predeces-
sor organizations of the GKNT performing a similar
function were the State Scientific and Technical Com-
mittee (1957-1961) , the State Committee for New Tech-
nology (1955-1957), Gosplan (1951-1955), and the
State Committee for the Introduction of Advanced
Technology into the National Economy (1947-1951) . Un-
til 1947 the planning of science and technology was
handled within Gosplan. °

The State Committee itself consists of about 70
members, about a third of whom are members of the
USSR Academy of Sciences and other academies. Some
Government ministers and prominent industrial leaders
sit on the GKNT. Among the ex officio members are
the President of the USSR Academy of Sciences, the
Chairman of the State Committee for Standards, the
Chairman of the State Committee for Inventions and
Discoveries, the Minister of Higher and Specialized
Secondary Education, and a deputy chairman of Gos-
plan. Some top executives from the Committee staff
are also members of the GKNT. The State Committee,
as such, meets only once or twice a year to consider
the main directions for the development of science
and technology as well as to approve the list of pri-
ority R&D problems to be included in the five year
plan.

37

The executive body of the GKNT is the Collegium,
composed of fewer than 2Q members and chaired by G.I.
Marchuk, the Chairman of the State Committee. Be-
sides the various deputy chairmen, the heads of cer-
tain departments and divisions plus a few Academi-
cians make up the membership. The Collegium meets
weekly and examines all problems that come before the
GKNT. Though the Collegium acts as an advisory body,
its decisions become decrees signed by Kirillin, and
its orders are followed by all departments of the
State Committee.

A simplified scheme of the internal organization
of the GKNT is presented in Figure 9-4. In addition
to various functional divisions charged with hand-
ling international liaison, information dissemina-
tion, science organization, and other tasks, depart-
ments have been established to monitor S&T develop-
ments in particular branches of industry, such as
chemicals and machine building. Functioning under
the GKNT is also an elaborate network of advisory
bodies which assist in the analysis of institutional
and policy problems of science and technology. Inte-
gral to this special consultative machinery are more
than 60 scientific councils on major interbranch S&T
problems, such as oceanography, new welding proces-
ses, and catalysis and its industrial utilization.
Some 5,500 persons participate in the work of these
councils, including nearly 160 academicians and cor-
responding members of the USSR and republic academies
of sciences, more than 1000 doctors of science and
about 1600 candidates of science. 10 The councils
monitor and forecast developments in a particular
field of science and technology, and/or progress in
solving important, national engineering and economic
problems .

The GKNT, as suggested by the above description,
is the principal state agency concerned with overall
S&T policy and performance. While possessing limited
direct authority over the actual conduct of research,
development, and innovation, the GKNT exercises im-
portant guidance and liaison functions for other min-
istries and agencies in R&D planning, coordination,
and performance.

38

FIGURE 8-4

STRUCTURE OF THE USSR STATE COMMITTEE
FOR SCIENCE AND TECHNOLOGY

Advisory Groups

Scientific Councils

for Major Intarbranch

S&T ? rob Loos

Scientific and __

Technical ::3au8ioni

Expert Groups —

.'nified Interaepaxt-
i«ntii Council for

Coordination of
Scientific Research
on Major Complex
Problems in Agri-
culture, Water
■j sources, end
Forestry

n

Scientific Council

on Organization and

economics of

Scientific and

Technical ?>esearcr.

and Development

3ranch Departments

J

Electric Power _
and Equipment

Chemistry

Mineral Resources

Agriculture

Metallurgy

1-

Precis ion

Instrument -bull ding
and Sadioelectronics

Machine 3uilding

n

rnmyttrmr Technology j
and Management System* '

Scientific Equips

Transportation

>1

Light and Food
Industries

Timber and Construction
Industry

functional Divisions
Departments

Science Organization

Financing and Capital
Investments

H

Summary Scientific
and Technical ?lan

n i

Organization and

Economics of Scientific

and Technical Research

Environmental Protection [—1

International Economic
and Sclent if ic -Technical
Organizations

Foreign Travel and
Assignments

Personnel

Administrative Services

Administrations

S&T Information and

Propaganda

Foreign Contacts

S&T Cooperation with
Socialise Countries

source:

Louvan E. Nolting, The Structure and Functions
of the U.S.S.R. State Committee for Science and
Technology (Washington, D.C., 1979), p. 21.

39

With respect to R&D planning and interagency co-
ordination, the GKNT

1. Prepares S&T forecasts and approves procedures
for developing such forecasts

2. Draws up proposals for the main directions of
R&D

3. Drafts a list of major S&T problems to be
solved during the next five year plan

4. Cooperates with Gosplan, Gosstroy, and the
Academy of Sciences in developing proposals
for the five year plans for S&T

5. Cooperates with Gosplan and the Academy in
proposals for introducing R&D results into
the economy.1

The planning and coordination functions are particu-
larly apparent on large, important projects which ex-
tend beyond the boundaries of a particular ministry,
i.e., so-called "interbranch" problems. Such pro-
jects proposed by the ministries or other agencies
are submitted to the GKNT for approval. The GKNT
controls an important share of the financing of such
projects and tries to settle disputes between parti-
cipating organizations. The State Committee also
oversees the implementation of these projects.

The GKNT also has a significant role in support-
ing and monitoring ongoing R&D. The GKNT works on
the development of indicators to measure S&T progress
and exercises control over development of the R&D re-
source base. It may decree the establishment or
closing of institutions, and it approves overall re-
quirements for machinery and equipment in the draft
enterprise plans. Together with Gosplan and Gossnab
it participates in supplying equipment to priority
projects. With Gossnab it plans the financing of
material and technical supply and finances the dis-
tribution of materials and equipment. In collabo-
ration with the State Committee for Labor and Social

40

Problems, the GKNT develops proposals regarding the
payment of scientists,. Operationally, the committee
has. the authority to review important research being
conducted at institutes, and it may issue binding di-
rectives to" cease R&D work which is redundant or of
no value. "

The State Planning Committee (Gosplan)

Gosplan has overall responsibility for the formu-
lation of economic plans which guide the activities
of middle-level management organs and their subordi-
nate facilities in pursuit of the objectives laid
down by the central leadership. Functioning essen-
tially as the "nerve center" of the Soviet economy,
Gosplan possesses considerable power over establish-
ments in every field. As a union-republic agency,
Gosplan' s authority extends to activities throughout
the economy. A simplified internal organizational
chart for Gosplan is provided in Figure 9-5. Gosplan
maintains departments for at least 30 different
branches of the economy and also has departments con-
cerned with general policy matters.

One of the latter is the Department for Comprehen-
sive Planning of the Introduction of New Technology
into the National Economy, established in 1966. The
concern of this department is indicative of the ori-
entation of Gosplan in R&D planning and management.
While general R&D planning is primarily the respon-
sibility of the GKNT and of the Academy of Sciences,
Gosplan cooperates with these agencies in planning
the introduction of R&D results into the economy.
Specifically the pertinent functions of Gosplan in-
clude:

1. Collaboration with the GKNT in consideration
of large interbranch (interministerial) S&T
projects

2. Planning the introduction of new technology

3. Consideration of the overall volume of capital
investment for S&T

41

FIGURE 8-5 GENERAL ORGANIZATION OF THE USSR
STATE PLANNING COMMITTEE (GOSPLAN)

Chairman
Collegium

Staff
Organizations

Administrative
Legal
Financial
General

Administration
of Affairs

Party Committee

Main Computer
Center

Main Administrations
and Departments

Branches of the
National Economy

Councils
and
Commissions

1

Institutes
Attached to
Gosplan

42

4. Collaboration with the Ministry of Finance
and the GKNT to determine the levels, of fund-
ing for S&T projects

5. Collaboration with Gossnab on planning materi-
al and technical supplies for R&D institutions

6. Participation in developing plans for training
scientific manpower

7. Collaboration with the State Committee on la-
bor and Social Problems and with the Ail-Union
Council of Trade Unions on wages and working
conditions for scientific personnel. 13

Overall, a major concern of Gosplan is the integra-
tion of technical plan targets with Gosplan1 s princi-
pal concern, production plan targets.

The State Committee for Material
and Technical Supply (Gossnab)

In the Soviet Union the allocation of commodities
is centrally planned in accordance with the output
targets specified by Gosplan. Supply of the most im-
portant articles is planned by Gosplan itself while
supply of the remainder is planned by all-union or
territorial organs of Gossnab, a union-republic agen-
cy. Inputs for industrial R&D are included in the
overall material and technical supply system, while
special provision has been made for acquisition of
inputs by Academy and university facilities.

Facilities requiring inputs submit their requests
to Gossnab, manager of the material and technical
supply system. The transfer of items takes place
only when Gossnab issues orders for their delivery.
In general, Gossnab' s authority is used to resolve
conflicting demands on supply and to balance the ma-
terial needs of producers and consumers,!^

The State Committee for Construction Affairs
(Gosstroy)

Gosstroy, a union-republic agency, plans and mon-
itors capital construction and major renovation of

43

facilities in the USSR. In §&T, Gosstroy develops
and implements, uniform policies directed at acceler-
ating technical progress in construction to raise the
effectiveness of this branch of industry.

Specifically, Gosstroy is charged with identifying
basic S&T problems in construction, construction ma-
terials, and architecture; with developing plans for
research to address such problems; and with coordi-
nating the relevant R&D. Gosstroy1 s S&T plans are
developed in collaboration with the GKNT and minis-
tries as well as other agencies of the Council of
Ministers .15

The State Committee for Standards (Gosstandart)

Gosstandart, an all-union body, assigns and di-
rects work on the development of technical and eco-
nomic standards, approves new standards that have
been developed, and conducts statewide inspections
to assure introduction of and adherence to approved
standards.^" Recently, Gosstandart has become in-
creasingly concerned with the elaboration of uniform
procedures for such activities as design and produc-
tion assimilation. The growing importance attached
to standardization relates to stepped-up efforts to
improve product quality as well as to economize on
design resources.

The State Committee for Inventions and Discoveries
(Goskomizobreteniya)

The State Committee for Inventions and Discoveries
maintains the state register of inventions and dis-
coveries and seeks to promote innovation in Soviet
science and industry. Among the responsibilities of
the Committee are the issuance of "author certifi-
cates" and patents, the introduction of inventions
into the economy, and the protection of state inter-
ests in inventions. Scientific discoveries are recog-
nized through the issuance of diplomas. Author cer-
tificates, the most common form of recognition, dif-
fer from patents in that the rights to the invention
accrue to the state, rather than to the inventors.

44

The certificates give the inventors/authors public
acknowledgment, and if use of the invention or inno-
vation results in production cost savings, monetary
rewards often are given to the inventors. 1?

An important function of the Committee is the na-
tional dissemination of information about inventions.
This is accomplished through the Committee* s Central
Scientific Research Institute of Patent Information
and Technical Economic Investigation and through the
journal Discoveries, Inventions, Industrial Proto-
types, and Trade Marks (Otkrytiya, izobreteniya, pro-
myshlennyye obraztsy, tovarnyye znaki) .

The Higher Certification Commission (VAK)

The Higher Certification Commission approves the
awarding of advanced degrees, makes all appointments
to senior academic positions, and selects the higher
educational institutions for advanced training in re-
search. The Commission also has the authority to re-
voke degrees. The Commission is made up of profes-
sors, doctors of science, and members of the USSR and
republic academies of sciences. Since 1974 VAK has
been an agency of the USSR Council of Ministers. Pre-
viously, it was subordinate to the USSR Ministry of
Higher and Specialized Secondary Education.

THE THREE INSTITUTIONAL SUBSYSTEMS
PERFORMING R&D

Structurally, scientific R&D in the USSR is based
within three different institutional subsystems: (1)
academies of sciences; (2) industrial branch minis-
tries; and (3) higher educational institutions or
VUZy. The terms "academy science," "branch sci-
ence," and "VUZ science" are commonly used in re-
ferring to this tripartite division of the research
sector. Indeed, Soviet science is divided predomi-
nantly along institutional and administrative lines
rather than according to different kinds of activity,

45

such as "basic research," "applied research," or "in-
novation." The planning and financing of R&D are
also conducted primarily on an institutional basis
rather than by stages, projects, or programs.

Each of these subsystems has a distinct orienta-
tion. According to Nolting's estimates, fundamental
research is concentrated overwhelmingly in the acad-
emy system, which accounts for roughly 67 to 79 per-
cent of the total. About 10 to 13 percent is per-
formed in the VUZy and from 8 to 23 percent in branch
R&D organizations. The latter, however, conduct the
vast bulk (90 to 95 percent) of officially reported
applied scientific research and development. Only
about 5 to 10 percent of official applied R&D is done
by the academies of sciences and the VUZy together. ^°
Though the amount of R&D performed in the VUZy has
grown recently, higher educational institutions re-
main preoccupied with pedagogical functions. This
predominantly teaching orientation reflects the So-
viet pattern of research and education which has long
been based on a degree of separation of the two that
is much greater than in the United States.

In terms of expenditures and manpower, the academy
system employs 9 percent of all scientific workers
and receives 8 percent of official allocations for
R&D. Branch scientific institutions of all kinds
have 58 percent of the scientific workers and 80 per-
cent of the official science budget. Higher educa-
tional institutions account for 28 percent and 9 per-
cent, respectively. Only 3 percent of all scientific
personnel and 2 percent of official science expendi-
tures are concentrated in production enterprises and
organizations . -*-°

Organizational dissociation and administrative
fragmentation are important features — and conse-
quences— of this tripartite division of the R&D sys-
tem. Each of these institutional networks is a re-
latively independent administrative hierarchy. Each
has its own distinct focus, set of interests, reward
structure, and approaches to the R&D function. All
three subsystems, moreover, are separated generally

46

not only from each other but from the world of pro-
duction as well. In short, structural features help
create and reinforce functional autonomy and nonin-
tegrative attitudes throughout the Soviet R&D commu-
nity.

The following sections present the composition and
organization of these three hierarchical subsystems,
and briefly describe the R&D planning and management
functions undertaken by the central management organ.
The structure and functions of a typical industrial
ministry are also outlined.

Academies of Sciences

The academies of sciences are prestigious organi-
zations composed of scientists and engineers who are
selected for membership in recognition of their pro-
fessional competence and achievement. There are
three types of academies — the all-union academy, re-
public academies, and branch academies. Subordinate
to each academy are a number of institutes, labora-
tories, observatories, experimental stations, librar-
ies, museums, and research ships. Most are organized
around scientific or technical disciplines. As a
rule, academy institutes tend to concentrate on fun-
damental research and generally constitute the lead-
ing Soviet facility in the particular scientific
field.

This scientific leadership is particularly true of
the facilities of the USSR Academy of Sciences. The
internal organization of this Academy is illustrated
in Figure 9-6. All full and corresponding members
constitute the General Assembly of the Academy. Be-
tween sessions of the General Assembly, a Presidium
consisting of elected full members of the Academy
(Academicians) administers the Academy's affairs. The
Presidium supervises 16 discipline-oriented divi-
sions. These divisions oversee the activities of the
Academy's research institutions. Between sessions of
the Assembly, each Division is run by a Bureau headed
by the Scientific-Secretary of the Division. Members
of the Bureaus and the directors of research insti-

47

FIGURE 8-6 STRUCTURE OF THE USSR ACADEMY OF SCIENCES

General Assembly

Presidium —

Organizations, Councils and

Commissions Attached to the

Presidium

Siberian Division 1

Affiliaces

Institutes Councils

Institutes

-cnmi

ssions

Council for Coordi-
nation of Scientific
Activities of the
Republic Academies

Republic
Academies

of
Sciences

Regional Amliates
and Scientific Centers

Institutes Councils Commissions

The Administrative Apparatus
of the Presidium

X

Physical-Technical and

Mathematical Sciences

Section

Chemical-Technical

and 3iological
Sciences Section

§■

-r

Divisions

Mathematics

General Physics and
Astronomy

Nuclear Physics

Physical-Technical Prob-
lems of Energetics

Mechanics and Control
Processes

-arta sciences

Section

5

Social Sciences
Section

Scientific Councils

for Problems
Attached to Sections

Divisions

General and Tech-
nical Chemistry

Physical Chemistry
and Technology of
Inorganic Materials

Biochemistry, Biophys-
ics and Chemistry of
Physiologically
Active Compounds

Physiology

General 3iology

§■

T

Divisions

Geology, Geophys-
ics and Geochem-
istry

Oceanography,
Physics of the
Atmosphere and
Geography

Divisions

Scientific
Institutions

a.

Scientific Councils
of Divisions

§■

History
Philosophy and Law
Economics
Literature and
Languages

Scientific
Institutions

Scientific

Institutions

Scientific
Institutions

Source: Gvishiani et al, Osnovnyye printsipy i obshchiye

problemy upravleniya naukoy, pp. 182-183; Nolting,
The Structure and Functions of the USSR State Com-
mittee for Science and Technology, p. 28.

48

tutes are elected by the Assembly of the Academy.

The institutes of the Academy tend to be centered
in Moscow and in the Leningrad and Novosibirsk Divi-
sions. However, the Academy has established a number
of affiliates and scientific centers to promote the
scientific and economic development of various re-
gions. Their expressed purpose is to advance sci-
entific progress on specific topics of more local im-
portance so that the area can develop economically.
The Soviet Academy has 8 affiliates and centers:
Bashkir, Dagestan, Karelian, Kazan, Kola, Komi, the
Far East, and the Urals. Each affiliate or center is
managed by a presidium, consisting of heads of insti-
tutes and affiliate subdivisions, plant managers, and
representatives from higher educational institutions
in the region.

The Siberian Division of the Soviet Academy is
unique in the Academy system. Unlike the discipline-
oriented departments, it is governed by its own gen-
eral assembly and presidium. It is administratively
subordinate to both the USSR Academy and the Council
of Ministers of the Russian Republic (RSFSR) . Funding
is provided by the RSFSR, which has no republic acad-
emy of its own. Thus, the Siberian Division has a
certain measure of independence vis-a-vis the Soviet
Academy. The principal facilities of the Siberian
Division are located in Novosibirsk in what is known
as Akademgorodok, or the Academy City.

The republic academies are dually subordinate to
the USSR Academy and to their respective republic
councils of ministers. Funding and administrative
supervision are the responsibility of the councils
of ministers; technical and functional supervision
is provided by the USSR Academy.

The republic academies are more oriented toward
solving industrial problems of their respective re-
public than is the Soviet Academy. To avoid dupli-
cation of effort, republic academies tend to be some-
what specialized and limited in scope. In a number
of cases, however, the institutes of republic acad-

49

emies are on a par with those of the USSR Academy,
and some, like the Paton Institute of Electric Weld-
ing of the Ukrainian Academy, are recognized as the
leading Soviet institutions in their fields.

Despite efforts to decentralize and disperse sci-
entific resources, however, Soviet science remains
highly concentrated in a few large urban centers.
Moscow alone boasts one-fourth of all scientific
workers, 34 percent of all doctors of science and 26
percent of all candidates of science. Here also are
the most qualified researchers: 45 percent of all
scientists with the title of professor; 72 percent
of all full members and 64 percent of all correspond-
ing members of the USSR Academy. In just three cit-
ies— Moscow, Leningrad, and Kiev — are concentrated
one fourth of all scientific institutions, nearly 40
percent of all R&D being performed in the country,
and more than 45 percent of the total allocations to
scientific research and development.^0

Finally, in addition to the Soviet and republic
academies of sciences, there are several specialized
branch academies under the ministries of their re-
spective fields. Some significant research facili-
ties are subordinate to these academies, particularly
in biomedicine. The specialized academies of inter-
est in R&D planning and management are the Academy of
Medical Sciences under the USSR Ministry of Health,
the Academy of Agricultural Sciences under the USSR
Ministry of Agriculture, and the Academy of Pedagog-
ical Sciences under the USSR Ministry of Higher and
Specialized Secondary Education. It may be noted
that the branch academy system was considerably re-
duced in the 1960s and many of its institutions
transferred to the republic academies. Table 9-1
supplies data concerning the size and composition
of the all-union, republic, and branch academies.
Table 9-2 provides data on the scientific centers of
the USSR Academy of Sciences.

The planning and managerial authority of the USSR
Academy in fundamental research is extensive. Report-
ing directly to the USSR Council of Ministers, the

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55

Academy has overall responsibility for development
of R&D in natural and social sciences. In these
areas, the Academy functions as a statewide center
for the development of science policy. It defines
the main directions in those fields, plans and co-
ordinates the R&D work, and carries out overall sci-
entific direction of projects on the most important
problems in all research institutions, regardless of
their departmental affiliation. Working with the re-
public councils of ministers, the Presidium of the
Soviet Academy coordinates the work of the republic
academies.

The comprehensiveness of the Academy's planning
authority justifies designating the Academy as a cen-
tral-level functional agency as well as a major per-
forming institutional subsystem, as previously noted.
Together with the GKNT and Gosplan, the Academy co-
ordinates and develops R&D plans not only for Academy
institutions but also for any facility conducting
work in the fields under its jurisdiction. The Acad-
emy also makes proposals on funds, personnel, and ma-
terials for R&D as a whole in the USSR. With the
GKNT, the Academy submits proposals to the USSR Coun-
cil of Ministers regarding the introduction of new
technology into the national economy. The work of
the Academy, especially in the natural and social
sciences, is funded almost entirely from the state
budget, although the GKNT allegedly influences and
possibly controls the size of the Academy budget.

In addition to these general responsibilities, the
USSR Academy and republic and branch academies direct
the activities of their subordinate establishments.
At sessions of the General Assembly, summary R&D
plans are approved, new research directions are dis-
cussed, and the creation of new facilities is con-
sidered. Scientific divisions, in turn, monitor the
formulation and execution of plans at specific facil-
ities .

Finally, the Academy also engages in education,
especially advanced training, of scientific manpower.
Many Academy institutes provide programs for graduate
study and award advanced degrees. Many members of
the Academy teach in universities.

56

Industrial Branch Ministries

Soviet industry is organized on a branch-of-indus-
try concept; the branch is defined by its products,
such as communications equipment industry, defense
industry, and machine tool and tool building indus-
try. Each branch is managed by an industrial minis-
try of the Council of Ministers. Currently there are
about 30 union-level industrial ministries in the
USSR Council of Ministers. The research institutes
and design organizations subordinate to the indus-
trial ministries at the union and republic levels
constitute what probably are the most important So-
viet resources for applied R&D. As already noted,
the ministerial branch system includes half of all
scientists and engineers in the Soviet Union and gar-
ners more than three-fourths of all the expenditures
for R&D. To be sure, the branch sector of science
is not just "industrial." There are other branches,
such as construction, trade, and justice, though the
bulk of this sector consists of industrial scientif-
ic organizations. Some non-industrial branch R&D is
done by branch VUZy and branch academies as well as
specialized branch scientific institutions.

The internal organization of a typical industrial
ministry is illustrated in Figure 9-7 . A collegium
consisting of the minister and his deputies consti-
tutes the top management of a ministry. The scien-
tific-technical council of the ministry is composed
of leading scientists and engineers; the council de-
liberates branch technology policy and monitors the
technical performance of facilities. There are also
ministry- level functional administrations concerned
with such matters as planning, finance, and supply.
Of these subdivisions, the technical administration
is charged with overseeing the development and im-
plementation of technology policy within the minis-
try and, specifically, with the formulation of the
technical chapters of the ministry plan.

The basic units of Soviet industry traditionally
have been and, to a large extent, still are research
institutes, design bureaus, and production enterpris-

57

FIGURE 8-7

ORGANIZATION AND MANAGEMENT OF R&D
IN A UNION LEVEL INDUSTRIAL MINISTRY

Minis car

Ministry Collegium

Scientific-Technical

Council

Technical
Administration

X

..-.SC1CUC43 01

che Technical
Admin is crat ion

Scientiiic ana

Technical Infor-
mation Institute

5ciance-Proauccion
Association (KFO)

Head R&D
Organ lzacion

R&D, Production and

Design Organizations

or Head Insclcuca

R&D, Production and

Design Organizations

or che >TPO

Ochar Functloaal
Administrations

All-tfnion Industrial Association (V?0)
or Main Administration (Glavk)

R&D, Production
and Design Organ-
izations

Science-Production
Association (NPO)

Head R&D
Organization

R&D, Production and

Design Organizations

of Head Institute

R&D. Production and

Design Organizations

ot" the X?0

Production
Association PC)

Head Production
Plant

R&D, Production and

Design Organizations

ot' Head Plant

Production
Association (PO)

Head Production
Plant

R&D. Production and

Design Organizations

of Head Plant

R&D, Production and
Design Organizations
of tha PO

R&D, Production and

Design Organizations
of the PO

Source: Adapted from "USSR Short Answers," p. 44

and Eugene Zaleski, "Planning and Financing
of Research and Development in the U.S.S.R.,"
in John R. Thomas and Ursula M. Kruse-Vau-
cienne, eds., Soviet Science and Technology:
Domestic and Foreign Perspectives (Washington,
D.C., 1977), p. 304.

58

es. These were grouped by product line and subordi-
nated to units of their respective ministries known
as chief directorates or main administrations (Glav-
ki) . After many years of experimentation with dif-
ferent management forms, the USSR Council of Minis-
ters decreed in 1973 that the industrial ministries
would switch to a "2-link" or "3-linkM management
structure in which the production main administra-
tions would be abolished and replaced by industrial
associations. Under this new format the basic units
are to be production and science-production associa-
tions which consist of groups of production enter-
prises and R&D institutions. Production and science-
production associations are to be subordinate either
to industrial associations or directly to the cen-
tral ministry apparatus. The alternative structures
are illustrated in Figure 9-7. At present, most in-
dustrial ministries have made or are making the
transition to the new system.

Perhaps the most important structural feature of
branch science is that R&D and production activities
have for a long time been organizationally separate
from each other . Even within the same ministry re-
search and development establishments and production
units have come under different channels of planning,
management, finance, and supply. This pattern of or-
ganization has tended to create strong departmental
barriers against effective linking of research with
production. A major purpose, in fact, of the manage-
ment restructuring now underway at the ministries is
to break down some of these obstacles that are rooted
largely in basic structural design.

An industrial ministry has broad responsibilities
in planning and managing R&D in its special area. The
ministry is responsible for evaluating the economic
and technological level of production and of product
output. It determines the best ways of utilizing R&D
results and of raising the level of development of
the branch on the basis of S&T achievements both at
home and abroad. Ministerial authorities not only
plan and oversee the solution of the most important
branch S&T problems but they also participate — some-

59

times as the lead agency — in the solution of compre-
hensive interbranch problems. In cooperation with
appropriate USSR ministries and agencies the ministry
resolves questions regarding the withdrawal of obso-
lete products from production and use. Supervision
over the observance of standards and the status of
means of measurement and tests falls within its com-
petence. For individual types of products for which
there are no state standards the ministry approves
branch technical norms. Each ministry also prepares
recommendations concerning the patenting of inven-
tions abroad as well as the purchase of foreign li-
censes for the latest machinery, equipment, mater-
ials, and technological processes. As illustra-
ted, responsibilities include those of "line" plan-
ning and administration of branch facilities and pro-
grams, along with interaction between the ministry
and state organs on functional issues, such as stan-
dards and invention policies.

The Ministry of Higher and Specialized
Secondary Education

Institutions of higher education (VUZy) , their
teaching staffs, and their students constitute an im-
portant R&D resource and the third relatively inde-
pendent subsystem. For example, Moscow State Uni-
versity alone has four subordinate research insti-
tutes, 33 basic science and industrial laboratories,
200 laboratories in the teaching departments, and 9
teaching-research stations. More than 4,000 of its
teaching staff participate in research activities.
In total, there were more than 800 civilian higher
educational institutions in the Soviet Union in 1972.
Some 60 percent of the daytime students in the VUZy
reportedly participate in research. Table 9-3
provides data on the distribution of scientific work-
ers by branch of science in 1970 and permits a com-
parison of the numbers in VUZy with those in scien-
tific research institutes. Fully one-third of the
scientific workers are in the VUZy, though they ac-
count for less than five percent of all R&D performed
in the country. Nonetheless, about 70 percent of all
research conducted on the basis of economic contracts
with industry is performed at the VUZy. 23

60

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61

The structure of the Soviet system of higher edu-
cation is complex, involving many ministries, agen-
cies, and Communist party organizations at both the
union and republic levels. The Ministry of Higher
and Specialized Secondary Education (MinVUZ) , which
has direct administrative authority over the vast
majority of VUZy, is preeminent, however. In addi-
tion, this Ministry maintains a number of indepen-
dent research and experimental facilities. Because
the Ministry is a union-republic ministry and be-
cause it administers research ranging from funda-
mental to narrowly applied, the relationship of Min-
VUZ to superior, subordinate, and other organs is
complex. This relationship is depicted in Figure 9-8

In general, the plans of the Academy and Gosplan
concerned, respectively, with fundamental research
and innovation must be accommodated in MinVUZ plan-
ning. However, the Ministry of Higher and Special-
ized Secondary Education as a rule administers di-
rectly the scientific work of the majority of VUZy
except for those establishments whose specialty has
made it more logical to place them under the juris-
diction— or partial jurisdiction — of a branch min-
istry. The administrative functions of MinVUZ in-
clude examination and approval of subordinate fa-
cility R&D plans and control over certain aspects
of funding.

As previously noted, however, higher educational
institutions have been assigned primarily a pedagog-
ical function, while the Academy and ministerial sub-
systems have been the main centers for advanced R&D.
Though the separation of research from teaching was
never absolute, the separation of the two realms
was striking, particularly compared to the United
States. Since the 1950s the Soviet leadership has
taken steps to build closer links between education
and research, between the VUZy and Academy insti-
tutes, on the one hand, and between the VUZy and the
world of industrial R&D and production, on the other.
Indeed, various research complexes have been formed
in some areas which seek to bring all three institu-
tional subsystems into intimate contact and joint
action.

62

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63

THE BASIC UNITS

At the base of the Soviet S&T establishment is a
vast array of organizations that actually conduct
research, development, and innovation activities.
Below we list and briefly describe these basic units
which include the research institute, design bureau,
higher educational institution, enterprise, and as-
sociation. As noted earlier, examples of each are
found under the respective hierarchical subsystems
although the organizations concerned mainly with pro-
duction, the enterprise and association, are almost
exclusively the province of industrial ministries.
For each of these basic units a simplified chart of
the internal organization is provided. At this
point, we do not elaborate on their R&D planning and
management functions, in part because this is dis-
cussed later in the study and in part because the
organizations are mainly concerned with the conduct
of R&D and not the formulation of policy.

In general, the organization of Soviet R&D is a
network of highly specialized establishments, each
concentrating only on a specific stage or stages of
the research-to-production process. Furthermore,
functional performers have also traditionally been
separate from each other both organizationally and
geographically .

With the growth in complexity of Soviet science
and technology, however, conventional patterns and
underlying principles have been undergoing change,
both by default and by design. Institutional evo-
lution has resulted in a variety of structures. To-
day there are over 100 designations of scientific
organizations in the USSR. However, the correspon-
dence between designation and function is generally
poor. One American authority observes:

The nomenclature of scientific organiza-
tions has become for the most part a hodge-
podge rather than an indication of func-
tional type. Today numerous scientific

64

research institutes do only design or
prototype work and no research, others
do only research and no development,
some research institutes concentrate
almost entirely on experimental testing
or assisting industrial plants in in-
novation, and many design agencies have
large research subdivisions, some of
them operating primarily as research or-
ganizations. 24

At the same time, S&T activity is becoming stead-
ily integrated with industrial production. Organi-
zational dissociation of functional performers is in-
creasingly giving way to new, more integrated struc-
tures, like the associations. The whole organiza-
tional edifice, particularly at the lower levels, is
in motion. This point should be kept in mind when
reading the following descriptions of the basic units
performing R&D.

Research Institutes

Basic and applied scientific research and a number
of design tasks are accomplished at institutes under
academies of sciences, MinVUZ, and the branch minis-
tries. While some institutes are quite small with no
more than 40 to 50 persons, others are major research
organizations with several hundred, or even thou-
sands, of scientists and engineers. Institutes vary
widely in the presence or absence of design, techni-
cal drafting, and testing facilities. Some research
institutes are "broad-profile," engaging in all stag-
es of R&D, and others are "specialized," limited to
applied research, to development, or to testing pro-
totypes. Some also act as "head" institutes deter-
mining technical policies and research assignments
for a group of institutes, and others operate inde-
pendently or subordinately.

The internal structure of a typical research in-
stitute of the Academy of Sciences is depicted in
Figure 9-9. Similarly, Figure 9-10 provides an over-
view of the organizational structure of a research

65

FIGURE 8-9 ORGANIZATIONAL STRUCTURE OF A RESEARCH

INSTITUTE OF THE USSR ACADEMY OF SCIENCES

i

Deputy
Director

Deputy

Director

Experimental
Stations

i

Observatories

Design Project
and 3ureau

LI

Scientific
Experimental
Exploitations

Director

Specialized
Research Groups

Department
of Research

Laboratories

Research
Groups and
Sectors

Laboratory

Research
Groups and
Sectors

Academic
Council

4

Communist
Party Section

Department

of
Education

Librarv

Archives

Information
Section

>

Source

Eugene Zaleski et al, eds . , Science Policy
in the USSR (Paris, 1969), p. 220.

66

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67

institute attached to an industrial branch ministry.
In general, the structural format of an Academy in-
stitute is less complex than that of a branch insti-
tute. The Academy system as a whole, in fact, is
less bureaucratically organized and run than the R&D
subsystem of the ministries.

Design Bureaus

Design and development engineering tasks are car-
ried out by organizations known as design bureaus or
institutes. The design bureaus range in size from
small groups within production enterprises to large
independent organizations of several hundred design
engineers and technologists known as experimental
plants. While some design facilities limit their
work to designing new products and machines, others
build and test prototypes as well. Still other or-
ganizations are primarily engaged in process design-
ing, or designing of machinery and installations,
and development of processes for the manufacture of
new products or the modernization of production.
They are variously titled design-technological bu-
reaus, project-design and technological bureaus, or
scientific research project-technological institutes,
In addition, there are so-called project institutes
that specialize in the designing and planning of new
plants or renovation of old enterprises. Although
scientific research is conducted at design bureaus,
it is of secondary importance to work on product and
process development and the building of prototypes.
Some design bureaus, however, do extensive industri-
al research and are often indistinguishable from
research institutes .26

Higher Educational Institutions

Most educational institutions conduct research of
some kind. These include (1) comprehensive univer-
sities, such as Moscow State University, where a
broad curriculum of natural sciences and humanities
is offered; (2) higher schools such as the Bauman
Moscow Higher Technical School and the polytechnic
institutes, where a variety of engineering courses

68

FIGURE 8-11 ORGANIZATION AND MANAGEMENT OF R&D

IN A HIGHER EDUCATIONAL INSTITUTION (VUZ)

Administrative
Divisions
of the VUZ

Scientific Research
Laboratories of the VUZ

J_

Other Facilities!

Deputy Dean of I
the Facultv \— —

for R&D

Dean of the
Facultv

£

Scientific Research
Laboratories of the
Facultv

Other Departments

Problem Scientific
Research Laboratories

Rector

Faculty

Department

Head of the
Department

I

Learned Council
of the VUZ

Deputy Rector
for R&D

Office of the
Deputy Rector

ZL

Scientific Research
Institutes of the VUZ

Faculty Learned
Council

T_

Scientific Research
Institutes of the

Facultv

Scientific Council
of the Department

T_

Branch Scientific Research
Laboratories

Source: "USSR Short Answers," p. 88

69

may be pursued; and (3) a large number of specialized
single-curriculum institutes, such as the Leningrad
Institute for Aviation Instrument Construction and
the Mendeleyev Moscow Chemical Technical Institute.
The institutes concentrate on applied research, most
of which is funded through contracts with industry.
University research generally is conducted within de-
partmental structures by an individual professor; but
in some universities special scientific research in-
stitutes have been formed.

Figure 9-11 presents a generalized organizational
chart of the administration of scientific research
work in VUZy. As the chart illustrates, a VUZ sci-
entific research institute may be subordinate to a
related faculty of the VUZ or to the VUZ as a whole.
The research laboratories may be similarly subordi-
nated. VUZ labs may be branch laboratories or prob-
lem laboratories. The former conduct research on an
industrial organizations needs for new materials,
processes, and equipment, whereas problem laborato-
ries are created for the execution of major scien-
tific, engineering, and experimental design pro-
jects. In VUZy under the USSR Ministry of Higher
and Specialized Secondary Education at the end of
1971 there were 55 scientific research institutes,

A19 problem laboratories, and 528 branch laborato-

27

ries/'

Industrial Enterprises

An enterprise is a legally independent entity con-
cerned almost exclusively with production. It has
its own technical, production, and financial plan
(tekhpromf inplan) containing production, organiza-
tional, and technical chapters and targets, in
principle well integrated. It has its own assets,
including working capital. When on an independent
balance sheet, it has an account in the State Bank.
It most frequently includes a single plant.

The term enterprise (predpriyatiye) is also a ge-
neric term that covers a number of forms of produc-
tion organization. One is the plant (zavod) , which

70

is an industrial enterprise with mechanized means of
production. The term factory (fabrika) is used pri-
marily for plants in light industry and for plants
engaged in the initial processing of raw materials.
When several technologically related production ac-
tivities are combined, the resulting enterprise is
called a combine (kombinat) . A combine may consist
of a lead plant with several subordinate ones, or it
may be a single plant. Such enterprises have exis-
ted in metallurgy, chemicals, textiles, food, and
some other branches of industry for many years . The
firm (f irma) is an early type of production associa-
tion in which the management of the lead plant serves
as the management of a firm consisting of several
plants. When a firm is organized no new management
structure is set up. Usually the enterprises that
make up the firm are located in a single geographi-
cal area around a major city. Firms are most often
found in the light and food industries.

Today, the "independent" enterprise operates under
a principle of economic management known as khozras-
chet, which is variously translated as self-suppor-
ting or economic accountability. In the broadest
sense, the term implies that the organization is to
operate and be evaluated on the basis of economic
criteria. It is expected to cover current operating
expenses by revenue from the sale of its output, and
to finance internally or by credit a significant part
of its capital investment. To reinforce this econom-
ic orientation, success indicators for the facility,
which determine the size of bonuses for its person-
nel, are economic, including profitability, sales,
and measures of input productivity. Concomitant with
the economic orientation, the directors of establish-
ments operating under the khozraschet principle are
accorded greater authority to make decisions at the
operational level. With the number of official tar-
gets specified by middle- and upper-level management
organs restricted, as well as the degree of unoffi-
cial interference, the focus of decision-making re-
sponsibility has shifted downward in Soviet industry,
without challenging the ultimate supremacy of the
central leadership .

71

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72

In general, "factory science" has not been a prom-
inent feature of the Soviet industrial order. Histo-
rically, the organizational approach has emphasized
the separation of industrial research from production
as well as the centralization of R&D forces in insti-
tutes designed to serve the needs of the branch as a
whole rather than of individual enterprises. Conse-
quently, most enterprises lack adequate in-house R&D
facilities. The enterprise-level R&D system of fac-
tory laboratories, design offices, experimental shops,
and other scientific subdivisions serves primarily
the needs of current production. In fact, enterprise
scientific subdivisions are not classified under the
"science and science services sector" category of
economic and social organizations, and their activity
is not included in the national plan section for fi-
nancing research and design work. The organization
and structure of technical management within a typi-
cal enterprise is presented in Figure 9-12 . In many
instances, however, the enterprise R&D system does
play a vital role in the application of new technol-
ogy, in the creation of new products and processes,
the improvement of product quality or production ef-
ficiency, and the maintenance of quality control or
technological control of operations. 2°

Associations

Production associations (proizvodstvennyye obyed-
ineniya — POs) and science-production associations
(nauchno-proizvodstvennyye obyedineniya — NPOs) are
two entities replacing the independent enterprises
as the basic units of industrial organization. Even-
tually, almost all of Soviet industry will be con-
verted to the associational form of management. By
the fall of 1976 there were more than 3000 POs in
industry. Though they incorporated less than 10 per-
cent of all enterprises, production associations al-
ready accounted for nearly 40 percent of total in-
dustrial output. At the same time, NPOs — a more se-
lective form of organization — numbered less than 120.

The associations were created in part to acceler-
ate technological progress and to reduce the lead
times in the implementation of new technology. There-

73

fore, both the PO and NPO forms may include insti-
tutes and design bureaus. In the production asso-
ciation, scientific organizations are usually of lo-
cal significance and confine their research-develop-
ment-innovation activity primarily to the production
needs of the association. In the NPO, on the other
hand, these units are expected to conduct general-
purpose or branch-wide R&D, developing innovations
for the branch as a whole. The "head" organization
also differs. While this role belongs to an indus-
trial enterprise in the production association, it
is performed generally by a powerful research insti-
tute in the science-production association.

The NPO fulfills the functions of a branch scien-
tific-technical center. Its chief task is to create
and apply new technology within the shortest possible
time. It is not predominantly a producing organiza-
tion but is intended primarily to carry out R&D on
new products and processes. Ideally, when a new
product has been brought successfully through its
first production runs by an NPO, the mass production
of the article is taken up by the production asso-
ciations. In line with their concern for the entire
research-to-production cycle, several NPOs have spe-
cial start-up plants and installation units which as-
sist other production facilities in introducing and
debugging new technology.

Some NPOs specialize in the creation of new prod-
ucts. Others develop production technology and con-
trol systems. Still others concentrate on the de-
velopment and assimilation of new technological pro-
cesses. Among the most important tasks of NPOs are
reported to be the installation and adjustment of new
technology, the conduct of patent/license work, the
maintenance of S&T information services, the fore-
casting of new product demand, and the development of
estimates of labor and materials requirements.

In internal organization and management the asso-
ciations exhibit a range of alternative formats. The
degree to which the enterprises in a production as-
sociation lose their autonomy varies widely. For ex-

74

FIGURE 8-13

MANAGEMENT STRUCTURE FOR A TYPICAL
SCIENCE-PRODUCTION ASSOCIATION (NPO)

Council of Directors
of che MPO

Director of the MPO

Deputy Director
for Science

Research
Departmencs

Technological
Department

Computer
Center

Department ot
Standardization
i Nora-setting

Project Design
Department

Department of
S4T Information,
Patents i Licenses

Scientific-Technical
Council

Deputy to the

Deputy Director

for Science

Main Office

Division of Cost/Effect-
iveness Analysis

Departaent of Management
Rationalization

Departaent of Technical

Control

Chief 3oc«tkeeoer

Department of

Technical

Documentation

Laboratory
for Tests S
Measureaent

Technical
Departaent

Department of

the Chief Mechanic

and Power Engineer

3ureau for Technical
Security

Deputy Director
for Innovation

I

Innovacion Departaenc

Engineering Department

Production Control
Departaent

ixper^mental Workshops

Experimental Plant

Shop of Technological
Equipment i Instruments

Deputy Director
for Economic

Ouesc.ar.s

"r

Depucy Direccor
for Ceueral Questions

Planning and Economics
Departaent

Department of Laoor
and Wages

"iaance and
Department

:SClAaCS3

3ookkeeping Department

Department of Middle-
range Planning for Devel-
opment of che 3ranch and
of Technical i Economic
Research

Deparcmenc of Capical
Cons tract ion

Departaent of Material-
Technical Supplies and
Dao.1/ Services

Personnel Department

{ Department of Administra*
| tion and Economic Manage-
! ment

Legal 3ureau

Source: A. I. Bogdanov, Problemy upravleniya nauchno-

tekhnicheskim progressom: obzor (Moscow, 1977),
p. 54.

75

ample, in the Leningrad Optical-Mechanical Associa-
tion the general management of the PO fully replaces
the plant managements. At the Svetlana Association
each enterprise retains a measure of autonomy, and
only the basic management functions are centralized.
The management of the PO is the same as the manage-
ment of the largest and most modern of the plants in
the association, i.e., the "head" organization of the
PO. The other plants are organized as branches of
this leading plant. At the Elektrosila Association
some of the plants are fully merged with the PO,
whereas others have retained some autonomy. A sim-
ilar pattern of structural diversity also character-
izes the science-production associations. According
to a model organizational statute on the NPO, issued
by the central leadership at the end of 1975, how-
ever, all units joining the association lose their
independence. Nonetheless, practice continues to
diverge from this uniform pattern. Figure 9-13 il-
lustrates the model management structure for a sci-
ence-production association.

THE ORGANIZATIONAL SYSTEM:
WHOLE AND PARTS

The previous discussion of the organization of R&D
in the USSR suggests certain features and themes that
deserve emphasis. Most basic, of course, is the for-
mal design of the whole edifice for science and tech-
nology as an "organizational system" of multiple and
well integrated parts, with elaborate but generally
internally consistent assignments and responsibil-
ities. This image of a highly centralized and coor-
dinated Soviet system that is able to pursue compre-
hensive and coherent S&T policies often prevails
abroad.

The image, however, conceals as much as it re-
veals. Though highly centralized, the organizational
structure of Soviet science and technology is far
from monolithic. On the contrary, it is highly frag-
mented. An official at the top feels sometimes, in

76

fact, that he sits at the apex of an "inverted pyra-
mid," that the vast bulk of decisions and actions
are beyond his influence, much less his control.

Among the prominent structural properties of the
system is the segregation of activities by level in
the respective hierarchies. Although there are ex-
ceptions to the general pattern, the focus of plan-
ning and managerial responsibility is centered at
three levels: (1) all-union or national; (2) branch
or ministry, Academy, or republic; and (3) performer
organization (research, design, educational, and pro-
duction establishment) . When a republic organization
or element of local industry is involved, a fourth
or fifth level of planning responsibility may be in-
terjected accordingly, but in general the three enu-
merated levels designate the three types of relevant
plans. For example, while republic councils of min-
isters are subordinate to the USSR Council of Min-
isters, their plans have similar orientation and for-
mat. There is similar correspondence in the branch
plans at the union and republic levels of a union-
republic ministry, although the superior-subordinate
relationship is clear, with plans at the subordinate
levels incorporating directives of the superior lev-
el.

There is a clear intent to delineate organization-
ally line (or administrative) and staff (or function-
al) activities at each of the three levels. Certain
organs, such as the ministries, are responsible ad-
ministratively for all activities of a subset of eco-
nomic and technical establishments, usually in a par-
ticular industry. Other organs, such as the state
committees, are responsible for at least the formu-
lation and monitoring of a functionally oriented set
of policies for all Soviet establishments. The dis-
tinction is carried through to the branch and per-
former organization levels as well. Within the min-
istry and performer organizations, certain adminis-
trations, departments, or individuals are responsible
for overall performance of the organization as a
whole or for particular subdivisions, whereas plan-
ning, finance, supply, and other departments manage

77

their respective functions for the organization as
a whole. The distinction between line and staff
functions in the academies of sciences is somewhat
less clear, due in part to their relative autonomy
which in turn is related to the nature of fundamental
research. The academies themselves conduct a rela-
tively large share of the planning and other func-
tional activities for their subordinate facilities,
although academy facilities are also subject to the
policy formulated by the various specialized state
committees and, overall, by the GKNT.

Within this context the three principal central
management agencies which are concerned with R&D
planning and administration are the GKNT, the USSR
Academy of Sciences, and Gosplan. Of these, the
GKNT's functions may be described as comprehensive,
incorporating overall managerial responsibility for
Soviet S&T policy and particular concern with inter-
branch coordination problems and with facilitating
integration between academy, university, and indus-
trial R&D. The Academy and Gosplan are more special-
ized, concentrating respectively on fundamental re-
search and on industrial R&D and technology utiliza-
tion. They, in turn, are more heavily involved in
operational management in their respective areas,
either by formal administrative responsibility in
the Academy's case or by the significant de facto
authority of Gosplan in managing the economic and
technical activities of industrial establishments.
The three organs jointly issue many position or pol-
icy statements setting forth regulations and guide-
lines on one or another aspect of R&D planning and
management .

In general, the basic principles which underlie
the organizational structure also tend to undermine
its "systemic" character and cohesiveness . The key
to effective organization in the Soviet Union, just
as in the United States, lies not in structure but
in relationships between individuals and institu-
tions. With parts but no couplings between the parts
there can be no system. The traditional design
principles of extreme functional specialization by

78

organizations and of institutional dissociation have
created structural barriers rather than bonds between
the various organizational actors at all levels of
the Soviet S&T establishment. As we have seen, the
structure of decision making is predominantly verti-
cal and thus substantially inhibits lateral communi-
cation, cooperation, and coordination.

Similarly, structural features help create and re-
inforce functional autonomy and non- integrative atti-
tudes among the organizational parts to the detriment
of the whole. With parts and no common purpose there
can be no coupling and no system. Soviet authorities
naturally intend that the various organizations and
agencies complement each other in pursuit of objec-
tives specified by the leadership. In practice, how-
ever, the parochial aims and special interests of the
parts frequently prevail over the centrally defined
purposes and needs of the nation or "system" as a
whole. Soviet organizations have been built largely
on the principle of total or near total self-suffi-
ciency. Each ministry is an empire of its own, oper-
ating almost independently of the others. Each of
the central administrative and functional agencies
has acquired entrenched bureaucracies which compete
with and frustrate each other. The very structure
and nature of the R&D administrative system — with its
emphasis on multiple authorities, mixed sovereign-
ties, and incomplete functional mandates — inevitably
exert their influence on the policy process and on
performance. Though of a different kind perhaps than
exists in the United States, bureaucratic politics —
with all the realities of interagency power, clashes
of priorities, and conflicts of interests — nonethe-
less is a prominent and permanent feature of the "or-
ganizational system" for science and technology in
the USSR. It is no accident that better "linkage"
and "integration" are important organizational issues
in Soviet science policy today.

79

FOOTNOTES

1. G. A. Dorokhova, "Sovershenstvovaniye sistemy
organov upravleniya naukoy," Sovetskoye gosudarstvo
i pravo, 6 (1972), p. 60fn.

2. M. I. Piskotin, V. A. Rassudovskiy , and M. P.
Ring, eds., Organizatsionno-pravovyye voprosy ruko-
vodtsva naukoy v SSSR (Moscow: Nauka, 1973), p. 141.

3. US-USSR Joint Working Group in the Field of
Science Policy, Subgroup 1 — Planning and Management
of Research and Development, "USSR Short Answers to
US Questions Relating to USSR Research and Develop-
ment Planning and Management," Washington, D.C.,
National Science Foundation, February 20, 1976, pp.
3-4.

4. Ibid. , pp. 4-5 .

5. Ibid. , pp. 12-14.

6. Dorokhova, "Sovershenstvovaniye sistemy organov
upravleniya naukoy," pp. 64-65; Piskotin et al, Organ-
izatsionno-pravovyye rukovodstva naukoy v SSSR, pp.
187-192, 205. It is not surprising that the idea of
creating state committees for science and technology
in various republics, modeled after the Moscow body,
has been urged and discussed, apparently at the high-
est levels. See Dorokhova, "Sovershenstvovaniye sis-
temy organov upravleniya naukoy," p. 65. There is a
state committee for science and technology in Georgia,
but it is subordinate to the Georgian republic Coun-
cil of Ministers, not to the USSR GKNT.

7. For example, the USSR State Committee on Inven-
tions and Discoveries is "predominantly oriented to
regulating the initiatives and proposals coming from
below." Only 30 percent of its recommendations are
accepted by the ministries and departments. See Ye.
Artemyev and L. Kravets, Izobreteniya — novaya tekh-
nika — upravleniye (Moscow: Ekonomika, 1974), pp. 63,
179-180. Another Soviet critic similarly notes that

80

the state committee does not possess the authority
and means necessary to fulfill its functions. See
A. A. Podoprigora, Pravovyye voprosy sozdaniya i vne-
dreniya novoy tekhniki (Kiev, 1975), p. 85. In draw-
ing up the annual economic plan for 1975 the State
Committee on Inventions and Discoveries recommended
that 90 inventions and innovations be adopted but the
ministries accepted only 9 or 10 percent. See G.
Alekseyev, "The Effect Derived from Production,"
Pravda, September 13, 1976.

8. Dorokhova, "Sovershenstvovaniye sistemy organov
upravleniya naukoy," p. 61. For a more detailed dis-
cussion of the GKNT, see the excellent study by Lou-
van E. Nolting, The Structure and Functions of the
USSR State Committee for Science and Technology, U.S.
Bureau of the Census, Foreign Economic Reports,

No. (Washington, D.C., 1979).

9. Zaleski et al, Science Policy in the USSR, p. 54,

10. B. F. Zaitsev, "Struktura organov upravleniya
naukoy i tekhnikoy v usloviyakh nauchno-tekhnicheskoy
revolyutsii," in Organizatsiya upravleniya (Moscow,
1975), p. 36 and V. Disson, "Primeneniye programmno-
tselevogo metoda pri reshenii nauchno-tekhnicheskikh
problem," Planovoye khozyaystvo, 7 (1977), p. 82.

11. "USSR Short Answers," pp. 5-7.

12. Ibid.

13. Ibid., p. 8.

14. Zaleski et al, Science Policy in the USSR,
pp. 83-88.

15. V. A. Rassudovskiy, Gosudarstvennaya organiza-
tsiya nauki v SSSR (Moscow: Yuridicheskaya literatura,
1971), p. 30 and G. T. Prokhotskiy and V. G. Khryachen-
ko, Effektivnost raboty nauchno-issledovatelskikh or-
ganizatsii (Minsk, 1973), p. 31.

16. "USSR Short Answers," p. 8.

81

17. Ibid. , p. 7.

18. Louvan E. Nolting, The Financing of Research,
Development, and Innovation in the USSR, By Type of
Performer, U.S. Department of Commerce, Foreign Eco-
nomic Reports, No. 9 (Washington, D.C., 1976), pp. 3-4.

19. A. I. Shcherbakov, Sotsialno-ekonomicheskiye
problemy ef fektivnosti nauchnogo truda (Novosibirsk,
1975), p. 48.

20. V. I. Duzhenkov, "Problemy territorialnoy organ-
izatsii nauchnoy deyatelnosti," in Problemy deyatel-
nosti uchenogo i nauchnykh kollektivov (Moscow-Lenin-
grad, 1977), VI, pp. 48-49.

21. "USSR Short Answers," pp. 42-45.

22. I. D. Ivanov, "Preodoleniye prepyatsviy i stimu-
lirovaniye pri vnedrenii novoy tekhniki i novykh me-
todov upravleniya" (Overcoming Obstacles and Improving
Incentives in the Introduction of New Technology and
New Methods of Management"), p. 20. Soviet Side of
the Joint US-USSR Subgroup on Planning and Management
of Research and Development. Unpublished (draft) pa-
per, 1976; V. G. Shorin and A. A. Popova, "Organiza-
tsiya nauchnoy raboty v vuzakh," in Gvishiani et al,
Osnovnyye printsipy i obshchiye problemy upravleniya
naukoy , p. 200.

23. Ibid., pp. 203-204; Nolting, The Financing of-
Research, Development, and Innovation in the USSR,
pp. 13-14.

24. Ibid., p. 8.

25. Ibid.

26. Ibid. , pp. 8-9; Zaleski et al, Science Policy
in the USSR, pp. 406-408, 541-546.

27. "Shorin and Popova, "Organizatsiya nauchnoy ra-
boty v vuzakh," p. 203.

28. Nolting, The Financing of Research, Develop-
ment, and Innovation in the USSR, pp. 14-15.

82

IX THE FORMULATION OF R&D
PLANS AND PROGRAMS

OVERVIEW OF SCIENCE AND TECHNOLOGY PLANNING

Plans in the Soviet Union are the fundamental in-
strument for integrating and controlling production
activities of all kinds and at all levels of aggre-
gation, ranging from the state as a whole through a
variety of economic units to the individual. By as-
suming this burden, plans must be not only directive,
conveying the wishes of the leadership, but also suf-
ficiently informative on factors external to the plan-
ning unit to permit effective coordination. Plans
must also incorporate a system of incentives and pen-
alties to insure the accomplishment of assigned tasks.

By its very nature, R&D seems incompatible with
this type of planning. Optimally, plans predetermine
results, while R&D in varying degrees involves explo-
ration of unknown or uncertain territory. Problems
of uncertainty and risk are particularly great at the
fundamental research stage and subside increasingly
with movement toward the development end of the R&D
spectrum and the more deterministic world of produc-
tion. In general, this factor is recognized in So-
viet science policy. Larichev, for example, notes
that "formulation of the goals of planning depends
substantially on the means of determining with a suf-
ficient degree of certainty the expected final re-
sults of R&D."1 Because of the difficulties of pre-
dicting and evaluating R&D results, their aggregation
is also appreciably harder than the aggregation of
production targets. Indeed, until well into the 1950s
activities under research, development, and innova-
tion in the USSR were seen as "too complex and numer-
ous and the results too unpredictable and indefinite
to be worth the effort of joining them into a single
coherent plan. "2 For that matter, R&D was still re-

83

garded as being too aloof from general economic prob-
lems and processes to permit any convergence of sci-
ence policy with economic policy.

Increasingly, however, the planning of science and
technology has become a separate and consolidated ac-
tivity in the Soviet Union, especially since the late
1960s. Like the basic approach to organization and
structure, the orientation in planning is to treat
the research-to-production cycle as a single complex
of activity integrated along highly formal and hier-
archical lines. Containing a variety of individual
and sequential components that together constitute an
integrated unit, the R&D plan itself is but one ele-
ment of a larger plan governing all aspects of pro-
duction activity. In the State Plan for the Develop-
ment of the National Economy, the chapter incorpora-
ting the Plan for the Development of Science and Tech-
nology is accompanied by chapters devoted to planning
sectoral development (including industry, agriculture,
transport and communications) and capital construc-
tion, as well as to planning functional areas, such
as labor and manpower, various financial indicators,
and foreign trade. There are similar collections of
targets at all plan levels, and each collection for
all types of indicators in principle is mutually re-
inforcing and internally consistent.

Figure 10-1 demonstrates the interrelatedness of
the separate features of the various plans as well as
the hierarchical structure of plans described in chap-
ter 9. At the national level, S&T problems are clear-
ly one of the several types of national problems. The
problem orientation of the plans must be rendered con-
sistent with the task of establishing the appropriate
"proportions" in the national economy, or in other
words, ensuring that sectoral and regional develop-
ment is proceeding as intended and that the plan as
a whole is internally consistent. At the intermedi-
ate level, the task of reconciling plans with differ-
ent orientations — branch of the national economy or
industry, program, and geographical region — is illus-
trated. At the level of the performing organization,
the establishment generally must be responsive to the

84

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85

demands of each of the intermediate level plans. At
all levels, the economic, technical, and social ob-
jectives imposed upon the planning unit are alike,
accounting for the generally similar structure of the
plans at each level. In addition, the mechanisms for
plan expression and enforcement, such as indicators,
norms, standards, and incentives, are similar at all
levels. It is by these mechanisms that the state
committees and other functional agencies generally
impose requirements on planning authorities and there-
by relate to the vertical and administrative orienta-
tion shown in Figure 10-1.

In addition to the hierarchical and functional seg-
regation of plans depicted in Figure 10-1, plans are
also segregated temporally. At each of the levels
and by each of the responsible planning units, plans
are formulated which correspond to three time frames:
perspective or long-term plans; five-year plans; and
annual plans. Long-term plans are largely forecasts
of alternate trends in science and technology and in
the development of specific new products and proces-
ses over a period of from 5 to more than 20 years.
Perspective plans and forecasts are not really bind-
ing or operational documents; they serve primarily as
guidelines to orient economic strategy and science
policy. In general, the five-year and annual plans
incorporate relevant targets specified, respectively,
in the long-term and five-year plans, and they are
also made more "concrete" or detailed. In recent
years, the five-year plan has become more important
than the annual plan, as authorities have placed in-
creased emphasis on careful and comprehensive formu-
lation of goals over longer periods in order to con-
centrate resources more effectively on priority pro-
jects and to provide greater direction and control
over the nation's R&D effort. The connection between
the various kinds of R&D plans, segregated by admin-
istrative hierarchy, by function or program, and by
duration of operation, is illustrated in Fugure 10-2.

Despite the very formal and all-embracing charac-
ter of plans, the analytical base underpinning sci-
ence policy and planning is weakly developed. Advan-
ces in conceptualization of the R&D process have gen-

86

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87

erally lagged. Such notions as "innovation process,"
"technology transfer," and "commercialization cycle,"
which figure prominently in Western writings, are re-
latively unknown in the USSR. Soviet analysts, on
the contrary, tend to use terms like "research-produc-
tion cycle," "scientific and technological complex of
work," and "complex of preproduction work" to des-
cribe the sequencing, organization, and stimulation
of scientific R&D. For the most part, their concepts
have revolved around phase-dominant models of innova-
tion with emphasis on separate functions and individ-
ual work efforts performed in isolation from one an-
other and cut off from the application of results in-
to production. Only recently have they begun to take
a more process view of innovation with the focus on
final results and overall integration.

Also only recently has a predominantly linear-caus-
al view of innovation been called into question. This
model emphasizes a relatively simple and orderly for-
ward flow of work from theoretical conception to
practical use. The notion that innovation involves
a complex and helix-like stream of events and stages
with significant feedback coupling is not commonly
held. Accordingly, various stages of work are planned
predominantly in sequence rather than simultaneously
and in parallel. The result is significant losses of
time between different phases and a lengthening of
the process as a whole. 3

Though important strides have been made in recon-
ceptualizing R&D and in moving toward a more sophis-
ticated analytical base for deciding problems of sci-
entific choice, deficiencies remain. As two experts
on R&D note, "a number of questions in this complex
process have not yet been studied, and some have not
even been posed in the literature. "^ There is still
considerable ambiguity and inconsistency among Soviet
writers who describe and label the stages of the R&D
cycle. "No official methodological instructions by
Gosplan or the Central Statistical Administration are
available which delineate the precise stages," Nol-
ting points out. Moreover, he adds, the conceptual
division of stages is not necessarily followed in

88

planning, financing, and reporting of R&D. The basis
for planning and financing remains primarily the "in-
stitutional performer," not the stages of the research-
to-production cycle. 5 Again the heavy organizational
bias of the system is evident. Planning and the al-
location of resources are organized mainly around in-
stitutions rather than projects and programs.

Furthermore, R&D has been perceived and planned in
rather narrow terms and time frames. The planning
process has usually ended with the creation of exper-
imental prototypes or at best with small batch pro-
duction of new products. The actual introduction of
R&D results has been beyond the boundaries of science
planning. The focus has been on building up scien-
tific and technological "potential." The Russian
word for the latter, zadel, means literally a stock
of semi-finished articles waiting to be processed. A
short time horizon, usually only a year, has also pre-
vailed. Only since the late 1960s has attention been
given to developing the concept of scientific and
technical progress, to elaborating its meaning and
implications for both the research sector and the in-
dustrial sphere, and to making it the object of plan-
ning. Such an extension of the boundaries of plan-
ning complicates the task considerably. V. Yu. Buda-
vey and M. I. Panova observe, "The essence of the
matter is that the problem involves drawing up not
just a separate section of the national economic plan
but a second plan." Yet, they add, "Without global
evaluations of scientific and technical progress for
the long term it is impossible to work out a strate-
gic planning policy in this area and to determine
correctly the tasks of a uniform technology policy.""
No uniform conception of the future shape of science,
technology, or of the economy has emerged to guide
the planners, however.

Science policy analysis and planning still suffer
from inadequate indicators, norms, and information.
By 1974 nearly 300 different indicators were used
that directly or indirectly characterized scientific
and technical progress. However, they did not form
a sufficiently goal-oriented system of indicators to

89

insure the integrated planning of science, technol-
ogy, and economic growth. In addition, their appli-
cation was usually not concerned with the planning
and evaluation of production efficiency.' Scientif-
ically-based norms are still lacking for financing
research and for supplying it with human and material
resources. Norms governing the performance of R&D
are absent, as are norms regulating the length of
projects and their stages. When schedules are in-
cluded in planned assignments, they are often fixed
arbitrarily without any sufficient basis." Nobel lau-
reat and Academician Kantorovich noted in 1976 that
"in practice consideration of the time factor is not
systematic and is frequently non-existent" in R&D de-
cision making. " Yet, without taking time into ac-
count, all Soviet science analysts agree, it is vir-
tually impossible to evaluate any other indicators,
such as the technological novelty or economic advan-
tages of an idea. All depend directly on "time," on
how rapidly scientific ideas move from the laboratory
into use.

Serious deficiencies also exist in the data base
for planning and evaluating R&D. Decision makers are
frequently faced with fragmentary and contradictory
information. Statistics on expenditures for funda-
mental research, for applied research, and for de-
velopment are not regularly collected and reported.
The absence of standard concepts for various stages
and categories of R&D results in unsystematic infor-
mation and conflicting calculations. The information
gap is particularly glaring with respect to expendi-
tures for innovation and the introduction of new
technology. Since most R&D units at industrial en-
terprises and associations are not formally classi-
fied as "scientific institutions," statistics on R&D
performed at production establishments are not sys-
tematically gathered, nor are they included in "of-
ficial" science allocations. The lack of accounting
and reporting of these expenditures seriously "ham-
pers the objective measurement of inputs on scientif-
ic and technical progress," note S. Golosovsky and G.
Yeremenko.10 Essentially, the later stages of the
research-to-production cycle fall outside — or, more

90

accurately speaking, "between the cracks" of — the
system of planning and control. Finally, a constant
flow of operational information is lacking on the
course of plan implementation. Information comes at
regular reporting periods which may not coincide with
the planned completion of projects and tasks. Thus,
the information may come too late to permit timely
corrective act ion. H

It is also important to note that the "technology"
of Soviet planning is still relatively primitive.
Simple and semi- intuitive methods of evaluation and
manual calculations predominate. The inadequacy of
technique becomes all the more apparent in the light
of the increasing scale and complexity of the task it
must tackle. In preparing the annual plan alone Gos-
plan works up 47 million indicators. One variant of
the national macroeconomic plan requires 83 billion
separate calculations. At present nearly four bil-
lion documents circulate on various levels of the
planning and management hierarchy. Within industrial
enterprises, associations, and other economic organ-
izations almost five billion work orders and more
than two billion supplementary requests are formula-
ted each year. 12 The head of the Main Computer Cen-
ter at the USSR Gosplan reported with some pride that
about 20 percent of the Tenth Five Year Plan (1976-
1980) was prepared on the basis of computer tech-
niques. On the eve of the 1980s the pocket calcu-
lator has not yet arrived in the Soviet Union, and
the dominant tool at hand remains the abacus. "It is
no accident," observes Boris Milner, now of the In-
stitute for Systems Studies, "that a serious contra-
diction has developed between the growth of the vol-
ume of information and the traditional methods of da-
ta collection and processing."1

The need for more "science" in R&D planning and
management is generally recognized among Soviet auth-
orities today. Defects in the conduct of analytical
work in scientific organizations are decried at all
levels of the planning ladder. 15 Special attention
is being given to enhancing integrative capabilities,
both analytical and administrative, of central deci-

91

sion makers to formulate comprehensive and coherent
policies. Accordingly, interest is increasing of
late in developing and applying the modern tools of
systems planning and management and more sophistica-
ted decision aids in this area. Indeed, "systems
analysis" and "the systems approach" have become fa-
vorite terms as the regime seeks to build a more ef-
fective conceptual framework for R&D problem-solving.

These underlying aspects of S&T planning are im-
portant to note at the outset, because the formal
structure and procedures of planning tend to dominate
Soviet discussions of science policy and sometimes
overshadow these dimensions, which not only impact
upon the structure but, more importantly, influence
appreciably the quality of R&D decision making.

RESOURCE PLANNING AND ALLOCATION
FOR RESEARCH AND DEVELOPMENT

In a centrally planned economy like that of the
Soviet Union, control over real resources, and not
merely the availability of funds, is the essential
prerequisite for the conduct of R&D.1^ In other
words, work undertaken at the initiative of the per-
forming or sponsoring organization depends in large
part upon whether the activity itself and the expec-
ted capital, labor, and material inputs are each ac-
counted for in respective plan chapters. Ruble val-
ues serve as the principal means of measuring and ag-
gregating performance, but in most cases it is not
possible to bid resources away from other organiza-
tions as a means of expanding the scope of work. At
the least, then, funding serves as an essential if
passive indicator of the magnitudes of various cate-
gories of R&D. Whether funding can serve as an ac-
tive control mechanism, furnishing command over real
resources, is a function of the level of aggregation
of the decision, the specific fund and/or organiza-
tion involved, and the priority and nature of the re-
search.

92

While characteristics of the "concrete" project
may predominate in decision making at the level of
the performer organization, with funding a secondary
consideration, high-level decision making in prac-
tice cannot be made entirely dependent on a careful
study and aggregation of the characteristics of spe-
cific projects. At the highest level, when estima-
ting the total share of national income and determi-
ning the total share of the state budget which will
be devoted to science, the Council of Ministers must
consider not only the potential for scientific ad-
vance in necessarily broad categories of research
and development but also the impact of expanded tech-
nical advances on economic and social developments . '
The growth rate of expenditures on science is gener-
ally set somewhat higher than the growth rate for na-
tional income and industrial production to insure
scientific and technical progress.-'-" Indeed the very
rapid and sustained rise in total official Soviet al-
locations for science, equal to 2.4 billion rubles in
1958 and 17.4 billion rubles in 1975, is indicative
of the leadership's awareness of the growing relative
importance of technological development as a factor
contributing to economic growth.

The sum allocated to science, as well as its in-
tended breakdown by user category and purpose, is
specified in a chapter of the annual and five-year
State Plans for Development of the National Economy.
Here the total volume of outlays for scientific re-
search projects and the sources of financing are
stipulated, along with the overall wage fund for
workers at scientific institutions. J-" These indices,
in effect, determine the extent of money, manpower,
and materials for conducting R&D. Provisions for
capital investments for the construction, expansion,
and renovation of scientific facilities are also in-
cluded in another chapter of the macroeconomic plans
as part of the total volume of capital investments
for the development of various sectors of industry
and the economy. 0 The science expenditure plans are
formulated by the GKNT in collaboration with Gosplan,
the Academy of Sciences, and the Ministry of Finance,
on the basis of proposals submitted by the USSR min-

93

istries and departments as well as the union republic
councils of ministers. The plans emphasize, then,
both the association of financial and real resources
and the relationship of broad aggregates to the rec-
ommendations of intermediate level management organs
and institutional subsystems.

There are two broad sources of financing R&D: (1)
the State Budget and (2) the fiscal resources at the
disposal of ministries and agencies at the intermedi-
ate level and of enterprises and scientific organiza-
tions at the performer level. In Soviet terminology
the second source is designated "own funds." Most
own funds are, in fact, centralized by the ministry
that administers them. Only a portion are decentral-
ized and used directly by enterprises and organiza-
tions to contract for R&D with scientific institu-
tions. ^J- The amount of these resources for each min-
istry and agency is stipulated in the plan for finan-
cing scientific research projects as a source of fi-
nancing.

Slightly less than one-half of all science expen-
ditures is financed by the State Budget. Budgetary
allocations encompass, first, R&D aimed at solving
national priority or so-called "basic scientific and
technical problems" specified in the macroeconomic
plan. These "basic problems" are usually interbranch,
involving the joint efforts of multiple ministries
and agencies. The State Budget also finances re-
search in the natural and social sciences as well as
R&D projects linked to the solution of the most im-
portant branch-wide tasks.

As a rule, State Budget grants are heavily used in
the financing of theoretical or exploratory scientif-
ic research where R&D results cannot be closely asso-
ciated with ultimate economic savings. In 1975, for
example, 97 percent of expenditures by research in-
stitutes specializing in public health, 90 percent of
expenditures by those in agriculture, and 80 percent
of expenditures by the USSR and republic academies of
sciences were financed through the state and republic
budgets. 22 These same sources generally seem to fund

94

a much smaller portion of the activities of industri-
al applied R&D institutes. According to one recent
estimate, central budgetary allocations cover, on the
average, only about 20 to 25 percent of the work of
branch scientific organizations and about 15 percent
of the expenditures of industrial enterprises related
to "scientific and technical progress. ZJ

Budget grants are made directly to the intermedi-
ate level management organs — the academies of sci-
ences, the Ministry of Higher and Specialized Second-
ary Education, the branch ministries, and the GKNT.
The size of the grants is negotiated and coordinated
by the GKNT. In recent years, about 30 percent of
the budgetary allocations for science has been ear-
marked for the "basic S&T problems," which fall un-
der the general responsibility of the GKNT. The re-
maining 70 percent has been distributed to the min-
istries and other major agencies to be used at their
discretion. The "discretion" of these organs in dis-
tributing the funds — also largely in the form of
block grants — to performer organizations depends upon
the extent to which the latter' s activities are ac-
counted for in the all-union, branch, and republic
plans. In such instances, the funds may be "desig-
nated" and the intermediate level management organ
serves merely as a conduit. Sometimes, the facility
itself proposes these projects. In any case the to-
tal size of a facility's budget allocation is not
likely to fluctuate widely as a consequence of vari-
ation in the number and size of projects of all-union
and branch importance. In other words, work not ac-
counted for in all-union and branch tasking in total
tends to fluctuate in size and accordingly is funded
to furnish stability to facility activities.

The experience of the Ukrainian Academy of Sci-
ences in the 1960s illustrates this phenomenon as
well as the hierarchical funding procedure:

At the beginning of each year, the State Com-
mittee for Science and Technology negotiates
with the Ministry of Finance an overall pre-
liminary sum. On the basis of the proposal

95

made by the State Committee, Gosplan fixes
a global sum for the Ukrainian Academy of
Sciences for the coming year. This sum in-
creases from year to year at a more or less
standard rate of four to six percent.

Once the global sum has been fixed, the in-
stitutes of the Ukrainian Academy forward
their claims to their Division and to the
Presidium, which is aided in its delibera-
tion by a special department broken down in-
to a subdepartment for overall planning. The
Presidium has a number of other special de-
partments for finance, capital construction,
equipment and accounting.

Figures are then prepared for each of the
three Sections of the Academy which indicate
the provisional sum to be made available to
them for equipment and for other expenditures.
The Vice President of the Academy, responsi-
ble for each section, decides on the distri-
but ion of funds among the institutes concerned.

The experience, particularly the virtually automatic
increase in annual funding, also demonstrates that
budgetary allocations play an important active role
at higher levels of aggregation and particularly in
Academy fundamental research. There are similar ac-
counts regarding research conducted in higher educa-
tional institutions. In the 1960s, Wienert notes,
there was no relation between the nature of research
projects and the available financial means. Research
funds were distributed to the VUZy according to the
number of departments.^" In general, Zaleski con-
cludes that the traditional criteria for allocation
are the gross value of work on an historical basis
and/or the number of research topics. 27

Evidence suggests that institutional funding rath-
er than project funding is still the predominant prac-
tice in Soviet R&D, as is the tendency toward simple
aggregate planning and incremental planning "from the
achieved level." P. N. Zavlin and a group of science

96

analysts in Novosibirsk attribute the persistence of
these practices to the absence of formal criteria for
planning science and allocating resources. The
lack of any precise norms has allowed personal in-
fluence and establishment reputation to carry undue
weight. Dissatisfaction with existing methods causes
G. Pospelov, a Corresponding Member of the USSR Acad-
emy, to declare, "We must finance not only organiza-
tions, enterprises, and associations but also goals
and tasks, projects and programs. "29 The system of
institutional funding is also seen as a cause of in-
definite fixing of responsibility and poor coordina-
tion among R&D stages and projects.

Still other Soviet writers point to the contra-
diction between the conservative structure of expen-
ditures based on financing of immobile scientific or-
ganizations and the inherently dynamic character of
science. 30 The inertia of existing institutions and
ongoing projects is hard to break. Indeed, it is al-
most impossible, it seems, to "shut off" any unsuc-
cessful program, much less "shut down" an unproduc-
tive institution. As A. M. Birman notes, "While pro-
viding ostensible regulation and supervision, the
present system of financing research allows some in-
stitutions to go for years without producing any sig-
nificant results. "31 At the same time, it is diffi-
cult to get new ideas and projects accepted. Mount-
ing concern over these defects of the existing system
led to rising emphasis in the 1970s on the need to
expand application of a "programmed-goals approach"
to planning and financing of R&D. Such an approach
oriented toward projects and end results is frequent-
ly used in the military and space sectors. Praising
this method, Pospelov notes, "The new will not have
to 'fight its way up' from below, proving its right
to exist. Under such a system of financing, all
shoots of the new will be visible from above and can
always be given timely assistance. "32 But program
planning and zero-based budgeting have not yet become
dominant forces in Soviet civilian R&D activities.

To return to the issue of budgetary distribution,
industrial R&D conducted within the ministerial sys-
tem has a heavy component of state and ministry bud-

97

get financing, but often for a somewhat different
reason than at Academy and VUZy facilities. The con-
duct of fundamental research in the latter establish-
ments renders it difficult to relate research to prac-
tical results and link compensation accordingly. In-
dustrial research is generally applied, sometimes
narrowly so, creating the potential for direct com-
pensation based on results. The benefits of certain
R&D, however, may extend beyond the bounds of the
sponsoring and/or performing facility, and in princi-
ple this facility should consider such "external"
benefits in making its decision to undertake the pro-
ject. To consider the benefits when the facility is
evaluated on the basis of economic performance, a way
must be found for the facility to capture a portion
of the benefits. In the United States, a facility
might achieve this end through patents and subsequent
licensing agreements, but legally granted proprietary
rights of this type on a facility basis are severely
restricted in the USSR. In the Soviet system a State
Budget grant is used for this purpose. A case in
point is the large project to mechanize production
operations at the ZIL automobile plant:

The program was accomplished at the initiative
of the ZIL Association, but taking into account
its important national economic value, the State
also took part in its financing. Fifty percent
of ZIL's expenditures were covered by the State
Budget, and fifty percent were covered by pro-
fits of the association. The resources of the
association which were intended for improvement
of current production were not touched (the fund
for the development of production) .33

In general, State Budget grants to industrial facili-
ties are more likely to be tied to such specific pro-
jects of "important national economic value" than is
the case for Academy and university facilities.

Both at the central and intermediate management
level, small but significant reserve funds are re-
tained to finance R&D. The significance of the funds
derives from their reserve status and their priority,

98

or, in other words, from the flexible and discretion-
ary way in which they may be used. This is particu-
larly important in an economy where activities and
requisite inputs are tautly planned for in advance,
as in much centralized funding. The GKNT, for exam-
ple, retains as a reserve a modest fraction (1.5 to
2 percent) of the annual budget allocation to science.
The State Committee can distribute these funds as
needs arise during the year for important scientific
research work not included in the approved plan. In
the period 1971 to 1975, for example, research insti-
tutes under the Ukrainian Academy of Sciences com-
pleted 354 additional projects for which the GKNT al-
located 37 million rubles from its reserve fund. 34
Industrial ministries and other major agencies may
also keep at their disposal up to 2 percent of their
budget allocations for science for special use. The
"active" role of such funds is bolstered by their
high priority, especially in the case of the GKNT
fund. They are able to command real resources at
short notice for use in urgent and unanticipated pro-
jects.

Financing of R&D at the level of the performer or-
ganization, or decentrally financed R&D, is accounted
for either by contract with a sponsoring organization
or by revenue generated by the performer organiza-
tion's own economic activity. Research institutes
and design bureaus, of course, depend almost entirely
upon contract research for this financing, and the
importance of contract research in the total financ-
ing of their activities is naturally closely related
to the extent to which their work is directed at sat-
isfying the requirements of industry. In some minis-
tries, such as those machine-building ministries with
a pronounced "systems" or end product orientation
(e.g., motor vehicles, aircraft), certain R&D facili-
ties finance the majority of their work on the basis
of contracts. In institutes of the academies of sci-
ences contracting naturally is far less significant.
For the USSR Academy as a whole, by 1975 about 12
percent of the total work was financed by contract
receipts. In the Siberian Division and in the Ukrai-
nian Academy, which have more extensive ties with in-

99

dustry, the share of contract financing had climbed
to roughly 20 percent and 38 percent, respectively.
In some academy facilities in the Ukraine this figure
is much higher. In the Institute for Superhard Ma-
terials and the Physico-Mechanical Institute, for ex-
ample, contracts accounted in 1975 for 69 percent and
70 percent, respectively, of the total work.3->

The degree of contract financing in university fa-
cilities also varies considerably. In some technical
schools and departments, the share is extremely high.
Overall, in fact, contracts account for about 80 per-
cent of all VUZy R&D. This high share reflects the
concentration of VUZy research and development in
branch laboratories, which are entirely financed
through contracts made with the branch ministries. 3°
During the period 1971 through 1975 the volume of R&D
financed through the State Budget rose by 38 percent
while contract receipts increased by 78 percent.-*'

In the enterprise or production association sever-
al sources of funds are available for financing inno-
vation and R&D-related work. These include the Spe-
cial Fund for Financing Scientific Research of its
parent ministry as well as State Bank credits. The
largest source of financing is its own special pur-
pose funds: (1) the Unified Fund for the Development
of Science and Technology; (2) the Fund for Assimila-
tion of New Technology; (3) the Fund for Development
of Production. These funds are used to finance re-
search, development, and innovation conducted both by
enterprise scientific subdivisions and by outside
performers under contract. 3° In general, Berliner
concludes that "the organization of the supply of fi-
nancial resources for R&D appears to be no problem
for the innovating enterprise."-^ The real problem
is to create the will to innovate. Human motivation
is the commodity in short supply, not material and
fiscal resources.

On the whole, financial allotments at this level
of R&D tend to be passive. Decisions at the level of
the institute, design bureau, enterprise, and asso-
ciation can be related more easily to specific pro-

100

jects and input requirements without the necessity of
allocation by lump sum. Similarly, the lesser prior-
ity attached to decisions at this level implies that
funding is by no means a guarantee that real resour-
ces can be commanded if not allotted in production
and distribution plans. Thus, the importance and
priority of the particular input in question deter-
mines the extent to which funding decisions can have
an active role, especially at this level.

Taken together, then, these various factors and
considerations illustrate that the allocation of fi-
nancial resources to research and development is an
integral feature of Soviet planning. They also de-
monstrate the predominantly hierarchical nature of
financial planning as well as the relative importance
of various sources of funding. The degree to which
financial mechanisms are an "active" planning control
instrument is largely a function of the level and
priority of the decision and decision maker.

In addition to these features, a few other basic
points about Soviet resource planning and allocation
merit brief mention.

First, insufficient attention is given to the
utilization of resources. Only since the late 1960s
have authorities gradually become aware of constraints
on resources and concerned about the effectiveness of
their use. However, analytical work is still defi-
cient in this sphere, in large part because the whole
system of planning, financing, and management of R&D
remains basically input-oriented rather than output-
oriented.

A major aim, in fact, of the increased stress on
the programmed-goals approach is to help shift the
focus of planning, policy, and performance toward end
results. "By directly connecting goals and resources,
expenditures and output, programming methods of plan-
ning create a real basis for objectively evaluating
the effectiveness of resource utilization, for choos-
ing rational decisions, and for optimizing inter-
branch proportions," according to one group of So-
ld

viet decision analysts. 40 Academician Fedorenko also
describes this as an effective method of "dovetailing
goals and resources and of coordinating regional,
branch, and programmatic aspects of the plan for the
development of the national economy. "^ That is,
program planning is regarded by some Soviet writers
to be not only a more effective analytical device for
problem-solving, but also a better way of allocating
resources and balancing expenditures so as to insure
the appropriate "proportions," noted earlier in our
discussion, between the solution of key national S&T
problems and the development of various economic sec-
tors and regions. The preponderant weight of the ex-
isting branch approach to planning and financing
makes it difficult to concentrate R&D resources on
priority interbranch projects, to eliminate waste,
and to accelerate innovation.

Second, the State Budget in the Soviet Union is an
annual budget. There is no five-year budget that can
be linked to the five-year macroeconomic plan. Funds —
as the basis for obtaining material and technical re-
sources— are distributed only for one-year periods.
Such a short time horizon prevents the development of
a genuine investment mentality toward R&D outlays
that is oriented to long-term returns. On the con-
trary, it reinforces the dominant tendency to plan
"from the achieved level" and to focus on inputs rath-
er than results. Since unspent funds revert back to
the budget, there is a strong tendency for R&D per-
formers to use up all resources and thus "zero out"
at the end of the year. There is little incentive
to reduce expenses and to economize on materials and
labor under the existing system.

Third, there is the problem of coordinating fi-
nancing with material and technical supply. In prin-
ciple, each financial flow is to be matched by a cor-
responding physical flow, and whenever possible both
are to be planned. In practice, however, the linkage
rarely works smoothly and rapidly, and sometimes it
is not made at all. Part of the problem is that R&D
organizations frequently cannot anticipate their re-
quirements for materials, equipment, and scientific

102

instruments, and some delays are unavoidable. But
the main trouble lies in the notorious inefficiencies
of the Soviet supply system. Supply needs are not
automatically met through the allocation of financial
resources or through inclusion of R&D targets into
the S&T plans. Instead, these requirements are writ-
ten into the Plan for Material Supplies which is a
separate chapter of the state economic plan but not
always well integrated with it. If an item is not
included in the supply plan its procurement is always
protracted, if not impossible. This is especially
true for R&D facilities at production establishments
which lack priority status on the distribution list.
In general, though, scientific and engineering sup-
plies are scarce. Not only modern sophisticated hard-
ware but even simple articles, like test tubes and
measuring jars, are hard to come by. The whole sci-
entific instruments industry in the USSR is still
backward and undeveloped .

In recent years, several steps have been taken to
remedy the supply problems of R&D organizations. Sev-
enty Moscow research institutes and design bureaus
belonging to 13 different ministries have been trans-
ferred— on an experimental basis — to nonallocated
supply status for the entire so-called "interminis-
try itemized list" of some 25,000 products through
the wholesale trade system. These facilities can ap-
parently now satisfy their supply needs much more
quickly than before. ^3

Efforts have also been made to expand the circula-
tion and use of scarce equipment through the intro-
duction of a rental supply system on a limited re-
gional basis. At some R&D centers expensive measur-
ing or testing devices sit around in warehouses after
being used only once. Equipment and instruments pile
up in labs. Meanwhile, other organizations with less
political influence or professional prestige, like
the VUZy, plant labs, and design bureaus, are unable
to acquire the necessary apparatus and scientific
supplies to conduct their R&D projects. This is in
part due to defects in amortization procedures for
scientific equipment. A more important factor, how-

103

ever, is that scientific institutions have engaged in
much the same kind of hoarding practices as industri-
al enterprises. They are reluctant to share, much
less give up, valuable and scarce resources, even if
they do not use them. The establishment of a rental
system is a means by which to free the quantity of
little used, highly expensive, greatly needed, but
essentially "frozen" equipment that is growing at an
appreciable rate. It represents a device by which to
break down some of the institutional barriers between
the "haves" and the "have nots," to bring together
the demand of some organizations and the supply of
others.

Suffice it to note that in the early 1970s the
rental of scientific instruments and lab equipment
began to be organized, initially in the Leningrad re-
gion. Plans have been worked out to develop such
rental services in a number of major scientific cen-
ters throughout the USSR, such as Moscow, Minsk, Tbi-
lisi, Kiev, and Irkutsk. Along with filling one-time
orders, the servicing of customers on the basis of
long-term contracts has begun to be practiced. Rent-
al arrangements sometimes involve the provision not
only of equipment and supplies but also of important
services, such as testing and measurement. This is
particularly important for extremely complex and
costly instruments, which can be easily damaged if
not handled properly. Given the present shortage of
technicians, this is a good way to maximize the ser-
vices and skills of existing specialists and to main-
tain quality control. Interestingly, other organiza-
tions like the USSR State Committee on Standards, the
USSR Ministry of Chemical Industry, and the USSR
Academy of Sciences have also begun to set up rental
services involving very sophisticated equipment and
precision instruments.^

Nonetheless, the inadequacy of supplies and the
inefficiency of their administration remain constant
complaints in the Soviet press. Here it is important
to bear in mind that the supply function, like plan-
ning and financing, is fragmented among numerous or-
ganizations. There is no single master and alloca-

104

tion holder of material resources, though the State
Committee for Material and Technical Supply (Gossnab)
presides over one of the most extensive and powerful
bureaucratic empires in the country. Still, more
than 75 percent of the 7000 supply and marketing or-
ganizations belongs to various ministries and depart-
ments. "Subdividing supply functions," an article in
Pravda notes, "has the undesired consequence that
each branch of the economy strives to supply 'its
own' enterprises first, frequently to the detriment
of the state as a whole. "^5 The cumbersome multi-
level and multi-agency distribution system gives rise
to poor coordination in planning, complicates work,
and impedes the solution of even routine matters.
Describing the defects of the system, the head manag-
er of supplies for the Moscow region observed re-
cently:

The organizational structure of the USSR Gos-
snab and its agencies does not yet fully meet
the demands of the national economy in as much
as the share of material resources sold through
this system is low, not over 50 percent.

The nationwide system has still not become the
basic, prevailing system of supply either at
the center or in local areas. As a result,
production associations, enterprises, construc-
tion and research organizations are compelled
to use numerous additional channels to find
and acquire the materials and equipment they
need to fulfill their plans and meet their
commitments.

At present there are no firmly established
procedures for planning and distributing the
goods on the itemized lists stipulated by the
USSR Gosplan and by the state economic plan.
Naturally, this makes for considerable du-
plication in the work of the USSR Gosplan
and Gossnab. ^6

Largely because of the difficulties in obtaining ma-
terials and equipment through Gossnab, R&D facilities
and production units continue to bypass the whole ma-

105

terial supplies system and try to satisfy their needs
illegally and by direct acquisition from producing
organizations.

THE SELECTION OF RESEARCH TOPICS AND TASKS

Program and project selection in Soviet R&D facil-
ities reflects the combined impact of possibilities
and objectives. Important factors influencing tech-
nical possibilities are current Soviet state-of-the-
art; the state-of-the-art abroad and potential for
foreign technology acquisition; and the quality and
quantity of material, labor, and capital inputs that
can be directed to technology generation and acqui-
sition. Important factors influencing objectives are
the level of the decision maker, his independent or
derived aspirations, and the urgency of the technical
problem at hand in comparison to other claimants on
resources. Influencing both possibilities and ob-
jectives is the productivity of investment in partic-
ular programs and projects, or in other words, the
value of the results which may be expected from a
given amount of inputs. While the selection proce-
dures and criteria clearly differ depending upon the
agency and type of R&D, and though our knowledge of
the details of Soviet decision making is still limit-
ed at all levels, the following description supplies
the important principles and general procedures.

In all organizations and at all levels of the hi-
erarchies the selection generally proceeds in three
stages: (1) an evaluation of where the organization
or entity (the nation as a whole, republic, or branch
of the economy) is at a particular time; (2) an as-
sessment of where the organization or entity is like-
ly to be under the assumptions of combining possibil-
ities with several variants of objectives; and (3) a
selection of alternatives. The chief concern in the
first stage is the set of indicators employed to
evaluate status; in the second, techniques of fore-
casting; and in the third, the designation and hier-
archy of plans, programs, and projects and the cri-

106

teria of choice. The hierarchy of plans has already
been described. Briefly, for definitional purposes,
the program-oriented hierarchy is as follows. Im-
portant, complex S&T problems are broken down into
targets, which in turn are subdivided into projects,
operationally the basic unit of research. These may
be further subdivided into tasks and even stages.
Examples of each generally do not appear simultane-
ously in the same plan. Highly aggregated indicators
tend to correspond to all-union and branch plans,
while detailed indicators are found in plans of per-
former organizations.

Indicators of current technical or economic status
are particularly important because they form the ba-
sis for all subsequent policy actions. Pertinent in-
dicators, of course, reflect the R&D orientation of
the particular decision -making unit, but they also
show what the decision maker believes to be impor-
tant. There is, then, a kind of circularity here:
indicators which the performer knows to be evaluative
influence his project selection and conduct.

In general, Soviet planning of science and tech-
nology has lacked until recently any formalized and
uniform set of indicators to guide strategy and pol-
icy development. Individual ministries have followed
different and often outdated regulations as well as
specific orders and sometimes contradictory explana-
tions of various agencies. Even the names and struc-
ture of R&D plans have varied from one branch to an-
other. Among 20 ministries and departments in the
Ukraine in 1973, for example, only three used the
same indicators in the R&D divisions of their plans. 47
Also absent have been any guidelines for effectively
linking the planning of R&D to the planning of indus-
trial production.

Significantly, new planning instructions issued by
Gosplan in 1974 seek to provide some systematic cri-
teria for scientific choice. The instructions stip-
ulate that the planning of S&T is an integral part of
the planning of scientific and technical progress.
Thus, the formulation of five-year and annual plans

107

is to be oriented to accelerating the rates of scien-
tific and technical advance and to raising the effi-
ciency of production along the following broad lines:

1. The creation and introduction of fundamental-
ly new tools, materials, and technological
processes which surpass the best domestic and
world standards

2 . The comprehensive improvement of product qual-
ity in all sectors of the national economy

3. A rapid rise in the technical level of the
stock of technological equipment and a faster
pace of replacement and modernization of ob-
solete machines and units

4. A reduction in the amount of materials con-
sumed in production by improving the product
mix and the design of machinery, by using ad-
vanced technology, and by utilizing more ful-
ly raw and other materials

5. A rise in the level of electrification of pro-
duction and in the efficiency of energy use

6. The creation of machine systems for complete
mechanization and automation of the most im-
portant production processes in industry,
construction, agriculture, and transportation

7. The renovation of existing and introduction
of progressive standards and specifications
for achieving a high technological level and
quality of output

8. The broad introduction of modern methods of
planning, organizing, and managing production,
including the use of up-to-date business mach-
ines and computer technology. ^

These broad directions, expressed in terms of appro-
priate volumes, rates, and proportions, have subse-
quently been referred to by Soviet science policy of-
ficials as "basic indicators" for measuring scientif-
ic and technical progress. ^9

108

In fact, the 1974 planning instructions included,
for the first time, a list of "basic technical and
economic indicators" for industrial production, which
are directly related to the broad evaluative consid-
erations noted above. Constituting a new subdivision
of the plan for the development of science and tech-
nology, these technical standards are designed to
serve several purposes. First, they provide crite-
ria for determining the usefulness and desirability
of proposed research, development, and innovation
measures, and in particular for calculating the re-
turn on investment. Second, they induce enterprises
to enhance technological performance, raise economic
efficiency, and improve product quality. Third, they
aim at enforcing the utilization of R&D results in
production. ->0

In effect, these technical standards are to serve
as the basic indicators for evaluating status and for
determining technological advance throughout the plan-
ing hierarchy. The indicators are couched in general
terms for application to the economy as a whole and
to the republics, in intermediate terms for the var-
ious branches of the economy, and in highly specific
terms for separate production units. The general in-
dicators include, for example, the following:

1. The proportion of products matching or exceed-
ing the best world standards

2. The volume of sales of such products

3. Changes in proportion and volume of substan-
dard and obsolete products

4. The proportion of obsolete products withdrawn
from manufacture to total products

5. The amount of production assimilated for the
first time or assimilated in less than 3 years
time

6. The degree of mechanization and automation of
labor

109

7. Relative reductions in the labor force due to
the rising technical level of production

8. Increases in labor productivity

9. Economies in the use of materials

10. Reducations in cost.

Indicators for each branch or enterprise specify the
production standards required to meet the general in-
dicators, such as, the average content of nutrients
in chemical fertilizers, the drilling speed of oil
and gas drilling equipment, and the proportion of to-
tal steel output per plant produced by the continuous
smelting method. 51 The orientation of these indica-
tors is clearly economic and demonstrates that pres-
sure on the scientific community is strong and grow-
ing to induce all researchers, designers, and engi-
neers to serve the needs of the economy.

It is of course difficult to conceive of a set of
concrete indicators which might represent the level
of achievement in a particular scientific discipline,
especially in fundamental research. This is also at-
tributable to the fact that no single organizational
unit is held responsible for advance in a specific
field, though leading Academy of Sciences departments,
councils, and facilities would come closer to assum-
ing this role than any comparable American facility.
Accordingly, the state of advance in a scientific
discipline is evaluated in informal discussion within
the relevant scientific community and more formal de-
liberation in a scientific problem council of the
Academy or of the GKNT responsible for the area. So-
viet status relative to the rest of the world is also
certainly an important consideration.

Prospective paths of scientific and technical ad-
vance are determined through forecasts, a procedure
which really constitutes the first stage of planning.
Much attention has been given in the USSR in recent
years to S&T forecasting. Its development has been
encouraged in large part to broaden the short time

110

horizon and to alter the incremental style of Soviet
decision making and thereby improve strategic plan-
ning in both science policy and economic policy.

S&T forecasts are projections of alternate trends
in major areas of science and technology. The vari-
ants ultimately selected as a basis for planning re-
flect established priorities and preferred options,
ideally arrived at by comparative evaluation of ex-
pediency, costs, and benefits. The approved fore-
casts are the foundation for so-called "basic direc-
tions in the development of science and technology
during the five-year plan period." The incorpora-
tion in forecasts of the combined impact of possibil-
ities and objectives is reflected in the fact that
subsequent "basic directions" are designated as the
framework for addressing the "basic S&T problems"
listed in the five-year plan.

Forecasts may be short term (5-7 years) , medium
term (10-15 years) , and long term (20 years and over)
and impact on the respective plan periods according-
ly. Short-term forecasts are used in machine build-
ing and metalworking to project new models of machin-
ery and equipment. The longer term forecasts are
used to project new types of products or engineering
systems. They are commonly made for problems or ar-
eas of national importance, and sometimes for branch-
es when the problem is clearly within the confines
of a particular branch. Long-term forecats have
been prepared, for example, for the fuel and energy
balance up to the year 2000, for hydro-electric pow-
er, long-term chemicalization, and development of
branches of heavy industry. 52

Though more than 150 different forecasting methods
have been developed, they fall generally into three
major types: extrapolation, expert judgment, and mod-
eling. Techniques of extrapolation are usually used
in areas where changes are gradual and not disrupted
by radically new discoveries. The future is projec-
ted largely on the basis of the continuation of pre-
sent tendencies of development. In expert judgment,
forecasting involves analysis of trends by groups of

111

experts in particular fields and the weighing of opin-
ions as to predominant probabilities in science and
technology. The method of modeling consists of build-
ing information models, games models, mathematical
models, and other systems of logic incorporating pre-
sent and future technical and economic characteris-
tics in particular fields of R&D."

In general, methods of collective expertise and
evaluation are most frequently used, particularly
when broad or nebulous questions are under examina-
tion, such as prospective advance in an area of fun-
damental science. Modeling is least used. This is
certainly in part due to the heavy demands placed on
extensive and consistent data panels and on careful
specification of parameters. Modeling is more ame-
nable to such tasks as the projection of performance
characteristics for certain categories of machinery
and the development of branch-of-the-economy fore-
casts.

On the procedural side, the forecasting of R&D of
national or interbranch scope is directed and moni-
tored by the "Big Four" planning agencies: the USSR
Academy of Sciences, the GKNT, Gosplan, and Gosstroy
(the USSR State Committee for Construction Affairs) .
The Academy and the GKNT, in particular, are the main
agencies in this activity. Each maintains an elabo-
rate structure of special problem councils and expert
groups which separately and jointly conduct forecast-
ing studies. S&T forecasting that is limited to an
intrabranch focus is the province of relevant branch
ministries, though subject to constraints imposed by
central forecasts. Branch-wide forecasts selected by
the ministries are also submitted to the "big four"
agencies for review and approval. ->5

It needs to be noted, however, that the whole area
of scientific forecasting and technology assessment
continues to suffer from serious deficiencies. Long-
range planning and forecasting are still relatively
undeveloped on the branch level. Some branches, Nol-
ting points out, do not even bother to draw up fore-
casts or perspective plans of intrabranch R&D. Fore-

112

casting in these ministries is confined to that por-
tion of R&D conducted in connection with major inter-
branch S&T programs. 5" Serious complaints are regis-
tered regarding the quality of forecasts. The latter
frequently do not take into account economic return,
social consequences, the dynamics of prices, etc."
The real problem is that no universally acceptable
methods have been found for evaluating these factors,
nor is there any agreement on how they interface . Be-
cause of these general evaluative deficiencies, fore-
casting continues to have so-called "black spots"
that reduce its value as an instrument of Soviet plan-
ning and analytical tool for deciding problems of
choice. Nonetheless, with evaluations of current sta-
tus and forecasts in hand, planners are prepared to
select programs and projects.

The selection of programs is an iterative process
among experts and councils in a position to know the
constraints placed on R&D by the availability of in-
tellectual, human, and material resources, on the one
hand, and the economic and political authorities who
provide the objectives and orientation for science on
the other. The selection of programs and projects
and their subsequent disaggregation generally follow
administrative lines corresponding to the infrastruc-
ture depicted in chapter 9. In important instances,
however, problems are of interbranch significance,
and R&D conducted on the problem requires coordina-
tion between Academy, university, and/or industrial
facilities of several ministries. Similar, multi-fa-
cility programs are developed within ministries. The
delegation and management of programs and projects,
both administratively and functionally oriented, is
discussed in greater detail later in this chapter.
For now, attention is given only to the selection of
original projects at various levels and particularly
the criteria of selection.

National and branch long-range plans for S&T are
essentially a bridge between forecasts and the five-
year plan. The long-range plan is "apparently a ten-
tative selection of the variants of basic directions
yielded by the forecasts and sets forth in broad

113

terms the new technology to be developed."" Five-
year and annual plans are the operational periods for
program selection and control, and the basic S&T prob-
lems that are included in the national economic plan
form the orientation for much of the R&D performed
in the Soviet Union, both because of their magnitude
and the high priority attached to their solution. In
the Eighth (1966-1970) and Ninth (1971-1975) Five-
Year Plans the basic problems reportedly consumed
about 40 percent of the allocations to science, while
in the Tenth Plan (1976-1980) they garnered about 25
percent of the official science budget. The number
of problems has also been reduced from nearly 250 to
around 200. The links between S&T forecasts, basic
directions, and basic problems as well as the lat-
ter' s subsequent breakdown into programs and pro-
jects are depicted in Figure 10-3.

The list of basic S&T problems is prepared by the
State Committee for Science and Technology in collab-
oration with Gosplan and the Academy of Sciences. Ap-
parently only about 10 percent of the problems — the
most important — actually go to the Council of Minis-
ters (and most likely the Politburo) for approval at
the highest level, but this portion probably absorbs
more than half of all expenditures. The rest are
more likely then approved on the spot by the "Big
Four" central planning agencies. ->" The largest of
the work programs associated with these problems un-
dergo expert evaluation at the State Expert Commis-
sion of the USSR Gosplan. For individual programs,
the GKNT organizes the expert judgment. The basic
criteria for the selection of these problems of na-
tional priority are their interbranch importance,
their social significance, and the technical-economic
benefit to be derived from their solution. The list
of basic problems reportedly contains no military
projects. "0

A basic S&T problem is defined as a complex of in-
terrelated tasks, the fulfillment of which plays an
important role in accelerating technological modern-
ization of the national economy as a whole. The "so-
lution" of a problem takes generally one of the fol-

114

FIGURE 9-3 COMPONENTS OF THE SYSTEM OF RESEARCH,
DEVELOPMENT, AND INNOVATION PLANNING
IN THE USSR

Variants of Scientific
Technical Forecast

«-H

3asic Direction

in RDI for
Perspective or
5-year Period
(chosen variant)

Party and Government
Economic Decisions

economic ana aociax
Forecasts

Scientific and Technical
Expertise and Information

3asic Directions in
Development of the

National Economy
For Perspective and
5-vear Periods

3asic S&T Problem
of 5-vear Period

3asic SiT Problem
of 5-vear Period

S6.T Program or
5-vear Period

JZ

General

Assignment or

Target

3*.

General

Assignment or

Target

Specific
(Project or Job)

Specific
Pro-ect or Job

Source: Louvan E. Nolting, The Planning of Research,
Development, and Innovation in the U.S.S.R.,
p. 20.

115

lowing forms:

1. Development and assimilation of new systems of
machines, new equipment for mechanization and
automation, and new materials and products

2. Development and assimilation of improved tech-
nological processes and methods of reducing
environmental pollution

3. Improvements in production organization and
management, including the introduction of au-
tomated control and management information
systems

4. Work on problems in the fields of construc-
tion, architecture, agriculture, and public
health.

To solve the 200 basic S&T problems in the current
Tenth Plan, nearly 1900 new kinds of machines, in-
struments, and products, 900 new economical materi-
als, more than 1000 new technological processes, and
about 700 automated control systems are slated for
development . "-'■

In general, fundamental research problems are not
included among the basic S&T problems but are listed
among the problems in the natural and social scien-
ces, which are also funded from the State Budget.
For example, only six percent of the basic problems
in the Eighth Plan incorporated the fundamental re-
search stage, but none was limited to it. More than
half of the problems were confined to areas of ap-
plied research and/or development. Only about 40
percent of the problems extended through the stage
of innovation and production assimilation. °^ In ac-
cord with the increasing emphasis in science policy
on the need to utilize R&D results in the economy,
the list of 200 basic problems in the Tenth Plan con-
tains a greater proportion of innovation-directed
projects. More than half of the new hardware, tech-
nology, and materials in development are planned to
be carried through to the phase of trial lot produc-

116

tion or to the successful operation of production
processes. 63

To illustrate the nature and variety of basic S&T
problems, let us offer the following examples from
the Tenth Plan. There are programs devoted to the
development and expanded use of numerically-controlled
machine tools and the development of modern equipment
for mechanizing and automating local materials han-
dling and warehouse operations as well as timber cut-
ting. Other programs focus on raising the unit ca-
pacity of machines and equipment, especially for the
chemical, power, and ferrous metallurgical industries.
These include building large ammonia producing plants,
and turbines and generators with a capacity of 500,
800, and 1000-1200 megawatts; developing ultra-long
1500 kV DC and 1150 kV AC transmission lines and nu-
clear power plants equipped with 1500 megawatt reac-
tors; and designing special excavating machines with
40, 65, and 180 cubic meter bucket draglines for coal
mining.

On another level are basic problems in the devel-
opment of furnaceless metallurgy, spindleless spin-
ning, and shuttleless weaving. New methods of pro-
ducing metal and high-grade steels, including oxygen
converters and electric smelting, are the subjects of
other programs. At the Oskol Electrometallurgical
Combine technology will be introduced for the produc-
tion of steel by direct reduction of iron ore without
blast furnace processing. Still other programs con-
centrate on the production of more efficient materi-
als, such as synthetic resins and plastics. Develop-
ments in laser technology and in industrial robots
also figure among the basic S&T problems.

Finally, problems in applied research — rather than
development or innovation — include programs on the
use of scientific principles of superconductivity and
magneto-hydrodynamics, space and oceans research, mo-
lecular biology, and seismology. A basic S&T problem
in the field of public health concerns the develop-
ment of methods and means for the prevention, diagno-
sis, and treatment of cardiovascular disorders. Other

117

programs deal with ways to protect the soil against
erosion as well as research on plant nutrition and
ways of raising soil fertility. 64

The procedure for project selection at lower lev-
els of the hierarchy is similar, although correspon-
dingly shorter and simpler with fewer organizations
involved. In Academy and university facilities,
"initiative" fundamental research not associated with
problems of superior bodies or contractual obliga-
tions materially reflects the professional interests
of the individual or research collectives. In indus-
try, ministries define problems of branch importance
in the same way that all-union R&D problems are de-
fined. The ministry scientific-technical council is
the chief consultative body. Large production asso-
ciations and other establishments may engage in a
similar procedure. In general, while personnel in
industrial institutes, design bureaus, and produc-
tion establishments may have some latitude to pursue
their professional interests, the heavily applied na-
ture of the work at these facilities severely limits
the scope of R&D.

Indeed, the selection process itself is influenced
by the character of the R&D in question. While the
consumer of the results frequently influences project
selection in industrial R&D, the resource base — the
qualifications, creative potential, and experience —
of the fundamental research organization also tends
to limit the scope of its work. In planning funda-
mental research, Larichev notes that "the resources
of the executors predetermine to a considerable de-
gree the goals that are achieved." On the other hand,
for predominantly development-oriented projects "the
composition of the performers has comparatively small
influence on the goals that are achieved; the same
R&D can be assigned to different groups of perform-
ers." Applied R&D occupies an intermediate position
in this regard. "5 Academician Kapitsa also observes
that with fundamental research planning "the choice
of talented individuals should have priority, even
over the choice of subjects." As he points out, "A
lame man cannot be taught to run however much money
is spent on him. "66

118

Precise figures are not available on the propor-
tions of R&D directly planned by central authorities,
the branch ministries, and local R&D performers. Al-
though the 200 basic S&T problems account for only
about 25 percent of total official R&D, central plan-
ning is not limited to these programs and may approach
40 to 50 percent, in Nolting's opinion. Ministerial-
ly planned R&D activities constitute probably about
30 percent of the total effort while lower level per-
formers account for the remainder."'

Throughout the discussion of selection, we have
referred to the pertinent criteria. In general, at
all levels and in all organizations criteria may be
grouped in three categories — economic, technical, and
social — with emphasis on the first. The criteria
themselves also are similar throughout the economy,
with allowance for the pertinent arena of the deci-
sion maker. Both the problems and the answers should
generally be formulated in a language appropriate for
the given planning environment. That is, scientific
evaluation, Larichev explains, "in spirit should be
a concrete response to problems of the planning or-
ganization." "Logical models of information conver-
sion which use verbal definitions of qualities are
more practical than mathematical ones," he adds. 68
In general, strong preference exists for relatively
simple evaluative methods and indicators rather than
for highly sophisticated analytical techniques and
complex quantitative formulas. For the most part,
R&D questions are seen by Larichev and other Soviet
science analysts to fall into the class of "weakly
structured decision problems," for which modern sys-
tems analytic techniques, including cost /effective-
ness methods, are not very useful. Only in the more
deterministic world of production-oriented develop-
ment projects are these conceptual aids deemed to be
of value in planning and deciding problems of choice
and uncertainty .69 Also as a general rule, Kapitsa
notes that the figures to be watched in project plan-
ning are not the absolute ones but the relative in-
dices— the percentages of the total used for sala-
ries, for administration, for scientific equipment,
etc. 70

119

Until the late 1960s, economic criteria did not
figure prominently in Soviet R&D decision making.
Scientists and engineers were generally not sensitive
to parameters of "cost" and to constraints on re-
sources. Their dominant attitude, as expressed in
the Academy's main journal, was that "there is no un-
equivocal criterion for the resources that should be
allocated to science. All of us must try to obtain
the greatest amount of resources possible."'-'- Once
when commenting upon the difficulties the leadership
faced in drawing up the first list of basic S&T prob-
lems, Academician Kirillin, Chairman of the GKNT, ob-
served that scientists did not always help policyma-
kers resolve the problems of choice. They willingly
gave positive endorsements and sometimes were indeci-
sive about a particular problem. But almost never
did they render negative opinions. '2

Similarly, the economic benefit or return of pro-
posed R&D was not always considered, much less cal-
culated, in the selection process. In 1968, for ex-
ample, the branch plan for the development of new
technology prepared by the Ministry of Instrument Ma-
king, Automation Equipment, and Control Systems in-
cluded estimates of the economic return for only six
percent of its applied research work, for about 30
percent of the undertakings devoted to the creation
of management information systems, and for about 60
percent of the projects dealing with the development
of new instruments and means of automation. The
absence of calculations of economic return is ex-
plained in large part by the fact that they were not
obligatory at this time. "Without estimates of eco-
nomic return," E. V. Kosov notes, "It is impossible
to evaluate and compare the activity of organizations
working in the field of science and technology."'^

Suffice it to say that since the late 1960s Krem-
lin authorities have mandated that all R&D projects
in the plan must be supported by calculations of eco-
nomic return redounding to the users of the new tech-
nology and to the economy as a whole. The main aim
of this requirement is to weed out nonpaying, imprac-
tical R&D, to promote technological innovation, and

120

to raise the general cost-effectiveness consciousness
of the R&D sector. For basic S&T problems of nation-
al priority, the prescribed indicators of economic
effectiveness include specific capital investments,
labor costs, expenditures on materials, electric pow-
er per unit of increase in production capacity, and
general expenditures in terms of cost. For each prob-
lem there is also compiled a technical level chart
which compares the projected new technology with the
best domestic and foreign technology, indicates the
branches of the economy in which the new technology
is to be applied, and gives rough projections of the
demand and export potential for the new or improved
technology. 75 The economic orientation of the cri-
teria and their similarity to the indicators of de-
velopment described earlier are apparent.

Nonetheless, the requirement to include calcula-
tions of economic return in R&D planning is not uni-
versally observed and enforced. Basic science ap-
pears generally to be excluded from this policy and
from the subject matter of the "economics of re-
search," a special field of study that has emerged
in the USSR since the mid-1960s. As one of its lead-
ing experts observes,

It is not possible to reduce the labor embodied
in Mendeleyev's discovery of the periodic table
to the cost of the cards on which the atomic
weights of chemical elements are entered and to
the cost of the sheets of paper on which Mende-
leyev recorded his idea of the periodic law. 76

More broadly, too, cost /effectiveness estimates tend
to be neglected or are elaborated pro forma simply to
justify decisions already made. The crux of the mat-
ter is that no uniform set of procedures has been es-
tablished for defining and calculating economic re-
turn applicable to individual branches and enterpris-
es. In general, L. Gliazer notes, "Almost all eco-
nomic calculations that are presently made in science
have a low degree of reliability. Here broad use is
made of various kinds of analytical techniques that
impart the appearance of objectivity to all manner of

121

subjective constructions."" S. M. Yampolskiy also
concludes that the calculation of economic return has
been made mandatory, in effect, only for projects of
major importance approved by the USSR Council of Min-
isters or for special bonus projects in which an en-
terprise assimilates a technology new to the USSR. 78

Even for the highest priority basic S&T problems,
however, economic analysis has limitations and defi-
ciencies. Among the current 200 basic problems eco-
nomic return was not determined in a number of cases,
nor were the technical level charts always complete
and accurate. In some instances, information was
lacking on important indicators. Analogies were some-
times used and not the latest achievements in compar-
ing technological merit. As a GKNT official notes,
"All this prevented the conduct of careful analysis
and expert review for all the problems. It is neces-
sary to give more attention to analysis and evalua-
tion of new technology, to make more precise the in-
formation on the technical level charts. "79

Studies by Soviet science policy specialists in
the early 1970s exposed a number of analytical and
methodological deficiencies in the handling of this
special class of decision problems. Commenting on
the experience of cost overruns — sometimes quite stag-
gering— among the 246 basic S&T problems during the
Eighth Five Year Plan, Kosov and Popov concluded that
"cost" was not, in fact, substantiated in the system
of coordination plans for these problems. No relia-
ble or universal methodology was used in calculating
the cost of either individual projects or programs
as a whole. Nor was there any consistent effort to
relate cost to economic return. Economic return was
not an important or obligatory object of planning.
There was also some duplication among the problems so
that parallel programs existed, for example, on de-
veloping new kinds of paper, new types of irrigation
systems for agriculture, and data processing systems
for handling S&T information. 80 Other specialists,
including 0. I. Volkov, Boris Zaitsev, and Boris La-
pin, also conclude that the coordination plans for
1966-1970 were deficient in "economic effective-
ness.""1 For the most part, the methods of planning

122

basic problems did not change until the Tenth Plan,
when central authorities tightened up on procedures
and laid down the "basic technical-economic indica-
tors" to guide the selection process.

All the same, despite improvements in calculating
effectiveness, economic return on R&D is not an ab-
solute criterion for selection of basic problems.
There are other factors, such as national prestige,
defense, social and even technological goals, that
may override considerations of economic benefit and
cost /effectiveness ratio. V. N. Arkhangelskiy, a ma-
jor authority on the planning and financing of R&D,
labels this the "criterion of necessity." In cases
where this criterion applies, he writes, only the
cost and not the economic return need be estimated."^
Though he gives no specific examples of basic S&T
problems that fit this category, we can surmise that
"necessity" may have determined the choice of some
of the research-oriented problems in the areas of
space, oceanography, public health, and atomic ener-
gy. Examples of past technology-oriented basic prob-
lems that may have been perceived in these terms were
the development of the Soviet supersonic transport
plane, the TU-144, and the new series of Arktik class
atomic ice breakers.

Even more difficult to quantify than economic cri-
teria are the two others, technical and particularly
social criteria. But these exert significant influ-
ence on project selection. The project to mechanize
production operations at the large ZIL truck plant is
a case in point. As a Soviet case study of the deci-
sion-making process that underlay this modernization
program notes:

The program of reconstruction had great economic,
technical, and social significance.

The economic significance of the program consisted
in that it was viewed as the creation of signifi-
cant economic return: the growth of labor produc-
tivity, increase of profitability of production,
and guaranteeing stability of quality production.

123

The technical significance of the program consis-
ted in the changeover to a new base model of truck,
the ZIL-130, instead of the ZIL-150, in simultane-
ously increasing production from 100 to 200 thou-
sand trucks per year, and in the introduction of
basically new technical solutions in the areas of
welding, forging, assembly, transport, and other
technological processes.

The social significance of the program consisted
in that it was viewed as a first order mechaniza-
tion and automation of labor intensive and heavy
work, as well as of unattractive or harmful opera-
tions. Significantly improved were the working
conditions. Social significance of the program
also consisted in the fact that it can be seen as
the accomplishment of large social measures in the
localities of the main plant and its branch facil-
ity: large residential and cultural construction,
including the building of health and sports facil-
ities, nursery schools and pioneer camps, etc.°3

Though automation brings obvious economic benefits in
higher productivity, the social consequences asso-
ciated with alleviating or eliminating heavy physical
labor appear to be further considerations behind at
least two of the current basic S&T problems. One of
these deals with the development of modern machinery
for handling materials and mechanizing warehouse op-
erations; the other focuses on equipment to mechanize
the process of timber cutting. The social signifi-
cance of these programs lies in the fact that one-
third of all Soviet industrial workers are still en-
gaged in manual labor and 16 percent do heavy physi-
cal labor. 8^

In another example, ecological factors are said to
have been of importance in the development of the
250,000 kilowatt thermal-electric turbine, one of the
early "basic S&T problems" selected by the regime:

Combined heat and power supply also has great so-
cial significance, since it facilitates an increase
in the purity of the atmosphere, a reduction in

124

thermal pollution of reservoirs and an improvement
in the comfort of industrial buildings.

Combined heat and power supply eliminates the re-
quirement for individual, small fuel-consuming
heaters. The use of powerful sources for the com-
bined generation of heat and electricity makes it
possible more effectively to organize purification
of the smokestack gases of steam generators of
fly-ash particles, which, for the small or even
large urban boilers, is difficult to accomplish in
terms of both the volume of work and capital in-
vestments required.

As a result, the number of harmful discharges of
ash, sulfur oxides and nitrous oxides into the at-
mosphere is sharply reduced. 85

We noted earlier that the list of 200 priority S&T
problems in the Tenth Five Year Plan includes R&D
programs in environmental protection. While "envi-
ronmental impact statements" have not yet become man-
datory in Soviet R&D planning, the importance of eco-
logical factors is definitely rising. Academician N.
P. Fedorenko writes, "Most economists now share the
opinion that purely economic criteria are becoming
increasingly inadequate as indicators of the optimal-
ity of economic growth and should be supplemented
with social and ecological indicators.""6

In general, though, there is still much room for
improvement in the selection of R&D programs. The so-
cial impact of new technology has only recently be-
come an object of planning, and the methods of eval-
uating "social effectiveness" are still undeveloped.
The new technical-economic indicators established by
Gosplan in 1974 have not yet become a firm basis for
standardizing the calculation of economic return and
technological level of prospective R&D. Their appli-
cation is still experimental, and opposition runs
strong in the ministries against centralization of
technical decision making. Given these circumstances,
Louvan Nolting concludes, "As in other countries,
rough rule-of-thumb balancing of economic and societ-

125

al interests will probably continue to be the princi-
pal method of regulating technical progress in the
Soviet Union."87

As regards the most important S&T problems in par-
ticular, deficiencies in decision making and adminis-
tration persist despite recent efforts to wrap these
processes in more modern clothes. To be sure, some
progress has been made in conceptualization of what
should be the parameters of a basic S&T problem. The
initial list, hastily formulated in 1965, displayed a
5000 percent difference in the cost range between the
least and the most expensive problems, suggesting
substantial weaknesses in defining the criteria of
choice for including a particular topic on the prior-
ity list.88 Nonetheless, there are still no uniform
criteria or adequate procedures for screening this
class of problem, and it remains a general catchall
category. Not all really important problems are put
on the list, and some topics are included at the sug-
gestion and under pressure of ministries and depart-
ments although they are, in fact, not of major impor-
tance. Not all the basic problems are interbranch or
of national significance. 89

Finally, special mention must be made of the role
of "inertia" in the selection and retention of Soviet
R&D programs. Investments already made and projects
in progress predetermine to a large extent the con-
tent of future plans. They constrain the options and
possibilities of planners to undertake new starts.
The task of preparing the five-year plan has been li-
kened by one Soviet observer to the problem of trying
to buy new furniture for an apartment when one-third
of the pieces are already there and another third is
on order. 90 Indeed, almost two-thirds of the current
200 top priority S&T programs have been carried over
from the Ninth Plan.^l The basic problems in the
Ninth Plan, in turn, were mostly continuations of
projects that were begun in the Eighth Plan when the
list of basic S&T problems was first established.

This continuity in Soviet planning is characteris-
tic more generally of a fundamentally conservative

126

approach to technological and economic development.
The tendency to plan "from the achieved level," which
holds sway throughout the system, reflects what has
been called an "add on" philosophy of design and mode
of advance. Strong preference and aptitude exist for
improving and scaling up existing processes rather
than for developing basically new processes and prod-
ucts. This is seen in the scaling up of blast fur-
naces in the iron and steel industry and of gas and
electric turbines and generators in the power indus-
try. In aviation, the development of a new aircraft
tends to incorporate existing technology rather than
depend upon successful new advances in airframe, en-
gine, and avionics. Similarly, the Soviet space pro-
gram has relied heavily for a long time on the Vostok
launch vehicle, and spacecraft have been developed
not by designing a new craft for each mission but by
building on to a standard craft. By contrast, there
have been great technological differences in the
American program among the Atlas, Thor, Titan, and
Saturn rockets, as well as among the Mercury, Gemini,
and Apollo spacecraft. "2

In addition, the rate of diffusion of new technol-
ogy in the Soviet Union is comparatively slower than
that in most industrial capitalist countries. During
the past 20 years, some major traditional industries
have continued to expand rapidly while in other coun-
tries their rate of growth has slowed appreciably. In
the steel industry, for example, production by tradi-
tional methods continued to grow even after the in-
troduction of oxygen smelting and continuous casting,
while in the West the new processes have tended to
drive out the old. The diffusion of synthetic fibers
has also been distinctly slower. As a general rule,
the rate of capital retirement is much lower in So-
viet industry, and new products and processes take
longer to capture a significant share of total out-
put.93

While these features of Soviet development reflect
in part a more conservative pattern and structure of
industrial production, they are also due, it seems,
to insufficient attention to alternative or more re-

127

cent processes at the R&D planning stage. This is
the conclusion of a group of Western scholars at the
University of Birmingham. In their recent study of
the technological level of industry in the USSR, they
note that Soviet authorities almost ignored alterna-
tives to their own SKB process for the manufacture of
synthetic rubber. New processes for making alloy and
quality steel other than electric slag remelting also
received inadequate attention. 94 As we have seen,
the basic Soviet organizational approach has been to
concentrate responsibility for industrial R&D in
large branch institutes and design bureaus under min-
isterial control. Complaints are frequently voiced
in the Soviet press that these units display monopo-
listic attitudes and an aversion to experimentation.
Interestingly, the new basic technical-economic in-
dicators, laid down in 1974 to guide R&D decision ma-
king, have also been criticized on the grounds that
they essentially preserve existing production methods
with only marginal improvements and tend to preclude
radical technological change. 95 Overall, as the Bir-
mingham study concludes, the Soviet pattern of inno-
vation and philosophy of design have been responsible
for the incremental and conservative mode of technol-
ogical advance in the USSR, as well as for the loss
of tempo and of technological lead, at least in some
areas, in relation to the United States over the past
two decades. 96

THE DISAGGREGATION AND ASSIGNMENT
OF RESEARCH TASKS

A large and frequently major share of the content
of the research plan of a management organ or research
establishment is composed of assignments specified by
a superior agency and/or contractual obligations re-
sulting from negotiations with organizations sponsor-
ing R&D. Earlier in this chapter, it was noted that
Soviet research assignments are delegated both on an
administrative basis, with a hierarchy of tasks cor-
responding to organizational affiliation, and on a

128

program basis, where problems and programs cross for-
mal departmental boundaries. In this part, we first
briefly describe the traditional process of vertical
disaggregation of plan tasks, and then discuss hori-
zontal relationships among performing and sponsoring
organizations on the same level. We then focus on
interbranch S&T problems .

Vertical Relationships

Disaggregation of plan assignments along vertical
administrative lines still constitutes the basic
framework for planning research, development, and the
implementation of results. In large part, this is
because most such assignments fall naturally within
the purview of a traditional organizational entity,
such as a ministry, which generally is constituted on
thematic grounds. In addition, other chapters of the
overall plans, including those concerned with produc-
tion, supply, and finance, are formed even more com-
pletely by vertical disaggregation of assignments.
Because R&D-related targets must be well coordinated
with other targets, there is a strong case for simi-
larly managing plan formulation. This rationale sug-
gests the most telling reason for the maintenance of
the vertical relationship: the process is already so
complex and demands the integration of so many par-
ticipants that to require the performer to synthesize
and establish priorities for directives coming from
several sources would bring the system to a grinding
halt. Accordingly, even priority directives origi-
nating from interbranch programs must be incorporated
in the traditional vertical planning process at the
level of the intermediate management organ, such as
the ministry.

The R&D planning process follows, on the whole,
the main lines of the overall planning process. The
formal procedure occurs in four stages: (1) transmis-
sion of directives to lower organs; (2) presentation
of draft plans to higher authorities; (3) approval of
the plan and its transmission; and (4) adjustments to
the plan. These distinctions or stages represent on-
ly a first approximation, however. As Zaleski ex-

129

plains, "In fact, planning done by higher and lower
organs is generally simultaneous, and the directives
and approvals are often replaced by bargaining and
mutual agreement.""

Chronologically, for the annual plan, general di-
rectives for the plan year should be formulated early
in the preceding year by the Politburo and Council of
Ministers. The Academy of Sciences, Gosplan, and the
GKNT, representing their respective areas of R&D, co-
ordinate and establish the basic objectives, render-
ing them more detailed and comprehensive. The GKNT,
in particular, has overall responsibility for plan
formulation on the functionally oriented program
plans. "Control figures," or preliminary plan as-
signments, are transmitted down the respective hier-
archies— Academy, ministry, republic — to the perform-
ing organizations. This stage should be completed by
the middle of the year.

Establishments prepare draft plans which are rout-
ed up through the hierarchy, aggregated at each stage.
They are considered and reconciled (with bargaining)
by the triad of central management organs noted above.
This stage should be completed by the end of Septem-
ber. Plans are then approved by the Council of Min-
isters and the Politburo, approved by the Supreme So-
viet, and transmitted down the administrative ladder
with formal and official plan assignments specified
at each level. Preparation of five-year plans pro-
ceeds in a similar fashion with, of course, a differ-
ent time frame.

Integration of the various sets of plan targets
contained in the separate plan chapters is highly im-
portant and sometimes essential. At the least, for
example, supply and production targets must be large-
ly consistent, but the same is true for R&D and es-
pecially innovation targets. The latter assignments
generally disrupt normal establishment operations and,
if not accounted for in the plan, may thereafter
threaten fulfillment of primary production tasks. On
the positive side, primary production assignments can
function as a strong stimulus to innovation if they

130

are predicated upon successful innovation, such as
the assimilation of a new process which economizes on
inputs. In other words, meeting production targets
may require that an innovation be completed. Accord-
ingly, it is expected — though not always realized —
that targets for R&D and especially innovation be for-
mulated in advance of production targets.

Specific procedures in different administrative
hierarchies vary as a function of the orientation of
the hierarchy and the nature of R&D activity. In the
Academy of Sciences, for example, R&D is the central
activity, and the uncertainty of fundamental research
renders it difficult to formulate "hard" target indi-
cators and thereby places a premium on expert consul-
tation and evaluation. Also because of the long-term
nature of basic research, five-year plan assignments
for fundamental research in the natural and social
sciences, though they do specify projected results,
performers, and schedules, are not formally elaborat-
ed into annual components; and they are treated more
as recommendations than as requirements.^" In gener-
al, basic research is planned as part of the formula-
tion of long-term trends and forecasts. The Academy
of Sciences has also been delegated responsibility
for its own planning. Not surprisingly, this tends
to be much less bureaucratically oriented than in the
branch ministries. There is broad participation
through an elaborate network of consultative and eval-
uative councils throughout the Academy structure.

Indeed, the contrast in the roles of the various
scientific problem councils of the Academy and the
official planning agencies is worthy of emphasis and
elaboration. The councils are consultative bodies
composed of leading experts in different fields of
science and technology. They have no formal adminis-
trative authority and their roles are somewhat ill-
defined, yet they frequently exert considerable in-
fluence over the course of research. They not only
examine general themes of research, but they may also
recommend divisions of assignments among institutes
and departments of institutions. The councils care-
fully review draft plans and suggest changes. Con-

131

versely, the role of planning agencies, certainly
Gosplan and probably to some extent the GKNT, is lim-
ited. While their formal powers are well-defined,
they normally function in the more deterministic
world of production and innovation. The relative au-
tonomy enjoyed by the Academy system clearly is at-
tributable more to the nature of fundamental research
than to any conscious decision on the part of the re-
gime. Indeed, any degree of autonomy is likely to be
granted grudgingly.

This leaves open the question of how the leader-
ship influences the course of Academy and university
fundamental research. While certainly not well de-
fined, the process of issuing "basic directions" for
science and technology appears to be significant. Un-
like plan targets, basic directions do not have the
force of law. In an important way, however, they
partly substitute for plan targets in areas where
(1) superior agencies are not qualified to fix de-
tailed plan assignments, or (2) superior agencies are
not administratively capable of determining appropri-
ate targets. The former concerns situations where
the performers themselves are uniquely capable of de-
termining the specific course of their work (e.g.,
Academy departments). Political authorities, for ex-
ample, would not regularly presume to judge the mer-
its of this or that research project in theoretical
physics, but, by specifying the broad objectives to
which a department's research program should contrib-
ute, the leadership guides the selection of assign-
ments.

The second condition is more interesting because
it is pervasive in science and the economy. Optimal-
ly, decision making at all levels should be channeled
by a combination of specific orders, incentives, and
penalties to assure that all activities contribute to
the accomplishment of goals set by the central lead-
ers. In fact, decision makers frequently have sub-
stantial autonomy, either because activities under
their jurisdiction have not been adequately encom-
passed by the instructions of superiors or because
elements of these instructions may conflict. In such

132

instances, the basic directions provide a set of
highly visible priorities to which decision makers
can flexibly relate in deciding problems of choice.
Basic directions facilitate the practice described by
American observers as "decentralizing through prior-
ities." In an important way, then, they form "a
parallel mechanism to the plan, ideally correcting
for the plan's limitations and contradictions. "100
Finally, the significance of the "basic directions"
has been attested to in a message by General Secre-
tary Brezhnev to the Academy of Sciences on its 250th
Birthday:

Scientists and specialists in the various
branches of the natural sciences, technol-
ogy, and the social sciences have given and
are continuing to give the Party enormous
help in accomplishing all these tasks and
in working out plans and implementing them.
For this, the Party gives them all heartfelt
thanks .

However, comrades, in the future you will
have to work even harder, more persistently
and more effectively. We have no intention
of dictating to you the details of research
topics — that is a matter for the scientists
themselves. But the basic directions of the
development of science, the main tasks that
life poses, will be determined jointly. ^01

In the industrial ministry hierarchy, research,
development, and innovation objectives must be incor-
porated with other economic goals. The character of
R&D at this stage, especially the increased predict-
ability of results, eases the task somewhat. The dis-
aggregation is usually straight-forward, although dif-
ficult to realize in practice. Targets of all-union
importance, by way of the GKNT, are included in plans
of ministries along with tasks of branch significance
initiated at that level. As a rule, the technical
administration of the ministry is charged with formu-
lating branch targets, a process which in principle
is conducted in close coordination with the economic-

133

planning, supply, finance, and other administrations.
Targets are subsequently transmitted to the institute,
design bureau, association, and enterprise, and form
the core of plans at that level. There, too, respon-
sibility is similarly distributed. R&D and innova-
tion plans are the province of technical departments
which similarly cooperate and coordinate with other
functional departments.

We know relatively little about the criteria for
selection of a particular facility to conduct a given
project. According to Soviet science policy experts,
the main factors that govern the distribution of as-
signments in the Academy, for example, are the gener-
al specialized profile of an institute, the qualifi-
cations of scientific personnel, and the potential of
an organization "to deliver."102 Other evidence sug-
gests that the nature of the task and the responsible
management organ virtually predetermine facility se-
lection. The Soviets have long stressed extreme spe-
cialization by institutional performer to eliminate
"wasteful" duplication of effort. Hence, the optimal
facility may be apparent. If several facilities
should be attractive candidates, another criterion
takes over. The "autarchy" of Soviet bureaucracies
has long been noted. If facility selection is not
made at the highest levels, delegation of the task to
an Academy department, industrial ministry, or the
Ministry of Higher and Specialized Secondary Educa-
tion probably settles the matter. Given the strong
sense of "branch patriotism" and jealously guarded
departmental domains, the advantage of an "outside"
facility must be very great before a management organ
will choose it over one of its own organizations. In
some instances, tasks are assigned and conducted on
the basis of "competition," and two or more facili-
ties are enlisted to work on a particular problem. In
general, competition is resorted to only when there
are very great complexities and uncertainties sur-
rounding a given problem. The military sector has
been known to use this device, as has the aviation
industry in the design of new aircraft.

134

In summary, the planning process is highly struc-
tured with only a little room for flexibility. Yet,
it is apparent that the leadership has no intention
of drastically weakening or confusing the somewhat
ponderous vertical chain of command. The use of the
GKNT and increased autonomy accorded to facility man-
agement do represent, however, efforts to enhance
flexibility and responsiveness at, respectively, the
highest and lowest levels. Recent Soviet develop-
ments in the application of integrated planning and
control techniques at the branch level are discussed
shortly in connection with multi-agency programs.

Horizontal Relationships

Horizontal relationships among facilities at com-
parable levels within and across the various bureau-
cratic subsystems, of course, are essential for the
functioning of any economic system. At the very
least, supplier-customer relations must be well elab-
orated, including those for which the product is R&D
results. Traditionally in the Soviet system, how-
ever, the arrangement of such relations has not been
handled directly by the facilities involved, at least
not formally, but rather by officials in the facili-
ties' parent management organs. For example, with
transmission of technical documentation and other
"disembodied" technology, Academy departments and
ministry technical administrations would be expected
at least to approve and possibly to plan the trans-
fer. For a new project used as capital equipment by
a second facility, the transfer would be more com-
plex. The producing ministry's technical and econom-
ic-planning administrations would jointly plan the
production. They in turn would coordinate with their
ministry's Main Administration for Sales (Glavsbyt) ,
which would arrange the transaction with the consumer
ministry's Main Administration for Supply (Glavsnab) .
The latter, in turn, would represent and interact
with the consumer establishment.

In practice, of course, the procedure has neces-
sarily been more flexible, with substantial formal
and informal interaction between producer and consum-

135

er organizations. Still, it generally does not ap-
proach the degree of freedom enjoyed by American
businesses in extrafirm negotiations. All Soviet
middle-level management agencies still retain these
functional administrations with unchanged formal re-
sponsibilities. It may be expected that projects
and transactions of an all-union and branch signifi-
cance are carefully planned and negotiated in the
traditional fashion.

Nonetheless, one of the important managerial in-
novations in recent years is the expansion of con-
tract R&D. While generally incorporated in plans for
formal approval, contract research may be arranged at
the initiative of the performing establishments large-
ly free of excessive restrictions or petty tutelage
of superior organs. The primary motivation behind
the change is the leadership's desire that indepen-
dent research facilities better serve the needs of
the economy. The motivation was imposed on many R&D
facilities. In 1962, independent industrial research
units began to be transferred to khozraschet operat-
ing principles, a transfer which, as previously noted,
implies that they must support themselves on the bas-
is of revenue earned from the sale of research. Of
course, the state and ministry are still major pur-
chasers, but the change means that budget grants are
no longer readily awarded to account for excess ca-
pacity.

Several features of contract research merit atten-
tion. Though contract regulations usually contain
elaborate provisions regarding the costing of work,
there is room for maneuver. If during the course of
the work unanticipated expenditures arise, supple-
mentary arrangements may be negotiated to a total
value of up to 50 percent more than the originally
agreed sum. On the other hand, if an R&D organiza-
tion manages to complete a contract for less than the
fixed sum, it may retain the balance . l^-* This pros-
pect of acquiring extra discretionary funds, which
can be used to buy equipment and thus broaden their
own experimental facilities, acts as a strong incen-
tive for research establishments, especially in the

136

Academy and the VUZy, to undertake contract research.
Another attraction of contracts for the VUZy is that
staff members working on contract R&D receive addi-
tional pay (up to half of their base salary) . Those
working on state budget-financed projects — no matter
how important they may be — get no extra money. -*-"^
These important incentives also increase the leverage
of the consumer organization to obtain quality work
on time and within cost.

Today, contractual research is well entrenched in
Soviet industry, particularly within the confines of
individual ministries. R&D facilities in various
sectors of machine building are particularly known
for contract research. This form of financing and
distribution of assignments is also employed in in-
terbranch industrial R&D projects. Contract research
has also expanded recently between industry and both
Academy and university facilities. While contrac-
tual R&D negotiated between performer establishments
clearly must take second place to budget-financed
tasks of all-union and branch importance, it does
create flexibility in the system and promote linkage
among the diverse participants in the research-to-
production cycle.

At the same time, there are still serious defi-
ciencies in the whole system of economic contracts
that limit the effectiveness of this managerial mech-
anism of assigning and coordinating plan tasks. The
crux of the matter is that contractual commitments
are not really binding and cannot guarantee the ac-
complishment of fixed assignments. As a worker at
the Academy1 s Institute of Organic Chemistry recently
observed, "Experience shows that the partner from in-
dustry can at any time and for any reason terminate
a contract without assuming any material or moral re-
sponsibility for this. "105 xhe monetary sanctions
for failure to meet contractual obligations are mini-
mal. They are sometimes even paid for out of state
budget funds. More important, violations of con-
tracts do not adversely affect the evaluation of the
offending organization's economic performance, nor do
they impact in any meaningful way upon the latter' s

137

incentive funds. In short, contractual conduct is
not a primary performance indicator for Soviet insti-
tutions or a significant force in Soviet economic
life. Furthermore, contractual relationships and
commitments between performer and consumer establish-
ments do not include supply organizations and hence
do not influence the latter' s behavior in meeting the
needs of contracting parties. 106 The system of con-
tracts as such does not and cannot insure the mutual
responsibility for the fulfillment of assumed tasks.
It is not an effective legal instrument for conduc-
ting business. Its basic deficiencies are a contin-
ual reminder that the Soviet system is fundamentally
a system of administrative rules and plans, not a
system of law, at least in the Western sense of the
term.

Multiagency Programs

Earlier in this chapter we discussed the procedure
and criteria for designating important S&T problems.
By design, all elements of the problems are delineat-
ed with relatively little consideration of the organ-
izational infrastructure supporting research and de-
velopment. The leadership intends that the problems
be defined on technical and economic grounds and not
be artificially circumscribed by organizational con-
siderations. Partly as a result, most problems are
of interbranch importance, sometimes involving facil-
ities from all of the R&D hierarchies. Hence, spe-
cial plans or programs are developed to direct work
on such problems.

In the Eighth (1966-1970) and Ninth (1971-1975)
Five-Year Plans the main managerial device for inte-
grating the whole complex of tasks and projects in-
volved in solving a priority S&T problem was called a
"coordination plan." In the Tenth Plan coordination
plans have been replaced by "scientific and technical
programs," which are generally more comprehensive
and specify more clearly the introduction of results.
There were approximately 240 coordination plans and
are now about 200 programs, the reduction in number
largely accounted for by the greater comprehensive-

138

ness of programs. Responsibility for a particular
basic problem is assigned by the GKNT to the most ap-
priate ministry or department, designated the "head
ministry" or lead agency. As a rule, the latter is
the main consumer of the results of the solution to
the problem.

By their nature, basic S&T problems are large-
scale, complex science policy efforts. The 246 prob-
lems in the Eighth Plan, for example, were broken
down by the lead agencies into over 3000 assignments
and projects and distributed to appropriate perform-
ers. The USSR Ministry of the Chemical Industry, for
example, acted as the head ministry for 14 basic prob-
lems. R&D organizations and production units from
more than 20 different ministries and departments were
enlisted to work on them. At the same time, R&D fa-
cilities of the Ministry of the Chemical Industry
participated as coperformers in nearly 150 projects
for 51 problems under the auspices of 27 ministries
and departments. Similarly, the USSR Ministry of
Heavy, Power, and Transport Machine Building was re-
sponsible for solving 10 basic problems in which 23
other ministries took part. This ministry, in turn,
worked on more than 240 projects dealing with differ-
ent priority problems for which other ministries were
in charge. In total, more than 65 all-union and
union-republic ministries and agencies as well as
over 350 performing organizations were involved in
the activity related to this select list of problems.
Some problems alone had as many as 50 or more insti-
tutional participants.-^'

The overall magnitude of effort remains about the
same for the current 200 basic S&T problems. The to-
tal number of ministries and departments has climbed
to over 70 while the number of performing establish-
ments exceeds 400. With the transfer to more compre-
hensive work programs that extend through the innova-
tion stage, the average number of organizational ac-
tors engaged on a given problem has grown. In addi-
tion, the USSR Academy of Sciences is involved on
more than half of the 200 programs. About one-third
of the basic problems also entail the participation

139

of various East European states who are members of
the Soviet-led Council for Mutual Economic Assis-
tance.108

While the GKNT has a central role in establishing
methodology for program formulation, in approval of
draft plans, in authorization of funding, and in mon-
itoring implementation, the branch ministry or organ-
ization selected as the lead agency is accorded pri-
mary operational authority and responsibility. The
lead agency drafts the plan or work program for the
problem, distributes specific assignments, arranges
for financial and material support, and accepts the
completed work from the various performers. In pre-
paring the plan, the head ministry creates a commis-
sion of experts from various organizations which
works in close collaboration with the scientific-
technical council and the technical administration
of the ministry as well as the R&D facility selected
by the ministry to be the lead scientific organiza-
tion for the problem. Through the expert commission,
the ministry sets preliminary assignments, determines
possible performers, including organizations under
its own jurisdiction and subordinate to other minis-
tries to whom certain portions of the work can be
contracted out, and fixes approximate deadlines for
implementation. These are then sent to the appro-
priate ministries and agencies which, directly with
their R&D units, consider the possibility of meeting
the targeted technical goals within suggested time
and cost constraints. Some performers come back with
counterproposals regarding deadlines, financing, and
technical criteria. To settle unclear issues and to
facilitate final agreement, the head ministry organ-
izes bilateral and multilateral discussions. Any dis-
putes that cannot be resolved by interagency bargain-
ing are arbitrated at the GKNT. The final draft ver-
sion of the plan or program is also sent to the GKNT
for adjustment and approval. The organization of
work on a basic S&T problem is illustrated in Fig-
ure 10-4.

One issue which is still not settled is the extent
to which the lead agency can impose its authority
over the facilities of another ministry in the event

140

FIGURE 9-4 ORGANIZATION OF R&D FOR THE SOLUTION

OF AN IMPORTANT S&T PROBLEM

i i

USSR Stace
Planning Committee

Scace Committee for
Science and Technology

Scientific Council for
the 5&T Problem

Ministry Responsible

for Solution of the

S&T Problem

Scientific-Technical

Council

of the Ministry

Ministry Technical
Administration

Lead R&D Organization
for the Problem

Ministries and Agencies of the USSR and

Union Republics, R&D Organizations, and

Industrial Enterprises Participating in

the Solution of the S&T Problem

1

R&D Organizations and Industrial
Enterprises Participating in
Solution of the Problem

:ne

Administrative Links
Functional Links

Source: "USSR Short Answers to US Questions," p. 17.

141

of conflict between program and branch assignments.
Clearly, the authorities attempt to preempt such. oc-
currences by requiring that program assignments be
fully incorporated in branch and establishment plans.
Presumably, this is an area where the authority of
the GKNT can be exerted. Interestingly, one of the
developments in the transfer from coordination plans
to programs is enhancement of the role of the GKNT.
Where a single ministry does not dominate in a pro-
gram, the State Committee can assume the responsibil-
ity of project distribution and direction. Examples
of such areas among the current 200 programs are com-
puter technology and environmental protection. "

To illustrate both the size and complexity of such
plans and programs, it is of interest to recount in
some detail the experience of developing the advanced
thermo-electric turbine. Each of the involved organ-
izations is represented in Figure 10-5 by administra-
tive affiliation. The prototype T-250/300-240 tur-
bine was created as part of the solution to the prob-
lem, "To Develop and Take Measures to Ensure the Fur-
ther Development of Centralized Heat Supply for Cit-
ies and Industrial Enterprises." The latter was one
of the 246 basic S&T problems included in the Eighth
Five Year Plan. The lead agency in this instance was
the Ministry of Power and Electrification. The fol-
lowing tasks were included in the coordination plan
for this particular project : HO

No. Nature of Tasks Responsible Performer

1. Issuance of the tech- The scientif ic-techni-
nical tasking for the cal council of the Min-
design of the turbinea istry of Power and Elec-
trification

2. Examination and ap- The scientif ic-techni-
proval of the prelim- cal council of the Min-
inary project design istry of Power and Elec-
of the turbine instal- trification

lation"

3. Approval of the tech- The scientif ic-techni-
nical project design cal council of the Min-
of the turbine0 istry of Power and Elec-
trification

142

Outfitting the primary The Urals Turbine Motor

test bench for the as- Plant (UTMZ) and the

sembly and testing of Ministry of Construc-

the turbine tion of the RSFSR

Building the prototype UTMZ
of the turbine genera-
tor

Manufacturing the feed- The "Ekonomayzer" Plant
er turbine pump for the and the Kaluga turbine
turbine installation plant

7. Constructing the test
stands for full-scale
trials at the Sredne-
Urals combined heat and
power supply station

8. Assembly of the pri-
mary and auxiliary
equipment for the Mos-
energo electric power
station

9. Conducting start-up
operations and testing
the blocks with the
T-250/300-240 turbine
at the Mosenergo elec-
tric power station

The USSR Ministry of
Power and Electrifica-
tion

The Mosenergo electric
power station, the Mos-
energomontazh trust,
UTMZ, and the Taganrog
boiler factory

The National Trust for
the organization and
rationalization of re-
gional electric power
stations and systems
(ORGRES) , Mosenergo,
UTMZ, TKZ

10. Checking the vibration ORGRES, Mosenergo, the

condition of the ro-
tors, stresses in the
vanes, temperature
fields and transfer-
ences under different
conditions of turbine
operation, and check-
ing the system of con-
trol and oil supply,
the economy of the tur-

All-Union Thermotech-
nical Institute, UTMZ,
TsKTI

143

bine generator, and char-
acteristics of the heat
exchangers in different
operating regimes

The technical tasking is compiled by the organi-
zations that order the equipment for the manu-
facturer and contains all of the basic require-
ments of the consignee: unit power, basic steam
parameters (pressure, temperature); parameters
of the extracted steam (pressure, temperature,
amount), the magnitude of vacuum, assigned tem-
perature and amount of cooler water, specific ex-
penditure of heat per generated kilowatt hour,
etc.

°The preliminary project design is compiled by the
manufacturer of the equipment and serves as the
basis for developing several variants of the or-
dered turbine. The elaboration of several vari-
ants is required for the final choice of the tur-
bine by the consignee.

cThe technical project design serves as the basis
for the final development of the thermal and de-
sign system of the turbine and is done in accord
with the approved draft design based on the va-
riant selected by the consignee. In the techni-
cal design all of the basic qualitative indica-
tors of the turbine are finally refined: the spe-
cific flow rate of heat, vacuum, internal effi-
ciency of the cylinders, etc. The technical de-
sign is examined by experts of the consignee and
is approved by the latter. The technical design
also determines the manufactured price of the
turbine and is the basis for drafting the working
blueprints and other technical documentation of
the plant which is manufacturing the turbine.

Each task was also divided into separate work stages
and projects.

Later, in the course of installing and adopting the
turbine it became necessary to make certain changes
both in the design of the turbine and in the thermal

144

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143

system of the generator. In general, the changes
fell into three groups. The first group included
questions involving modifications in the technical
documentation for the working design of the turbine
generator. The answers to these questions, for the
most part, were handled by the electric power station
in collaboration with the organizations that helped
install the equipment and put it into operation.
Usually, by decision of the Chief Engineer of the
electric power station or the Moscow Regional Power
System Administration, a group of specialists was set
up to handle particular problems. The group included
representatives from the design, layout, assembly,
scientific research, and other organizations, as well
as the manufacturers of the primary and auxiliary
equipment. After this group of experts arrived at a
decision, the general designer made the appropriate
changes in the operating blueprints and the consignee
issued an order to the assembly and installation or-
ganizations to carry out the work.

The second group of changes included technical de-
cisions regarding alterations in certain components
of the turbine installation. Responsibility for solv-
ing these matters lay primarily with the manufactur-
ers, who supplied the required new parts and attach-
ments.

The third group of changes included problems that
were first identified during operation and layout,
involving aspects in the operation of the turbine in-
stallation that were not noted earlier. Here the
ministries of the consignee and of the equipment man-
ufacturer organized special expert commissions to ad-
dress the problems. One of the most serious diffi-
culties that arose during the initial period of in-
stalling and operating the turbine concerned poor vi-
bration stability of the turbine. In this instance,
a decision was made by the Scientific-Technical Coun-
cil of the Ministry of Power and Electrification,
with the approval of the Ministry of Heavy, Power,
and Transport Machine Building, to create a special
expert commission to tackle the problem. Representa-
tives from participating organizations in both minis-

146

tries took part in the work of the commission. The
recommendations of the latter were examined and ap-
proved by the Scientific-Technical Council of the
Ministry of Power and Electrification. Finally, the
two principal ministries involved made a joint deci-
sion on the matter, which facilitated its solution in
a relatively short time, m The whole process il-
lustrates the role of expert commissions and the
place of bilateral and multilateral consultation in
Soviet R&D decision making, and especially in the
distribution and coordination of tasks.

Not all coordination plans were as well formulated
and organized as the above example, however. Concep-
tualization of problems was frequently inadequate so
that the coordination plans were "a hodgepodge in-
stead of a network of logical systems. "112 Some plans
were unwieldy and included activity that was not rel-
evant to the problems being addressed. Other plans
consisted of small projects inappropriately named
"basic problems." Various stages of work and pro-
jects were not correlated. Many of the plans were
not oriented to goals. Some had no fixed objective
at all. Ambiguity in defining goals and assigning
tasks led, in turn, to gaps and incoherence in pro-
gram development, which resulted ultimately in the
delays, cost overruns, and duplication noted earlier.
As M. A. Gusakov concluded, "In essence, the mix of
tasks for a basic problem is chosen to a large extent
by intuition."113

The replacement of coordination plans by S&T pro-
grams seeks to remedy these deficiencies. Much more
than before, the accent is on the actual introduction
of R&D results into the economy. Coordination plans
usually reached only to the stage of creating proto-
types of new items, trying out new processes, or is-
suing recommendations for series production. How-
ever, some new machines and designs were held up for
years at the recommendation stage. The new programs
emphasize bringing the R&D forward through the inno-
vation phase. Hence, more than 60 percent of the
machines, equipment, and instruments as well as 80
percent of the new processes, materials, and data

147

processing systems being developed in connection with
the 200 basic S&T problems in the Tenth Plan are "pro-
grammed" to be put into production or use. Timetables
are fixed for intermediate work stages as well as for
final completion. The design and construction of pi-
lot plants, and the creation of industrial facilities
assigned primary responsibility for the manufacture
of new items, are also stipulated. The old coordina-
tion plans rarely specified these assignments. A pro-
gram, then, is a more comprehensive and systematic
grouping of assignments than a "coordination plan."H4

In addition, the procedure for drawing up S&T pro-
grams has changed. In the past, coordination plans
were prepared mainly by the lead scientific organiza-
tions and the technical administrations of the minis-
tries; these were not always coordinated with the oth-
er functional divisions of the ministries. To inte-
grate more effectively science and economic planning,
the process of drafting S&T programs has been made
more of a collaborative effort involving the entire
ministerial staff. Comparing the old system of plans
with the new system of programs, Nolting concludes,
"Although both combined and coordinated all of the
projects relating to a given problem, the redesigna-
tion is more than a change in name."115

At the branch level program-type planning, called
"continuous" planning, has been implemented experi-
mentally in a few ministries. Such planning is done
in concert with a special form of financing R&D, the
Unified Fund for the Development of Science and Tech-
nology, which consolidates the funding of all stages
of the innovation cycle. A lead research institute,
design bureau, association, or enterprise is designa-
ted, and all work stages are implemented by an intra-
ministerial contract called a work order. The struc-
tural similarity to interbranch programs at the all-
union level is apparent. Because such plans are
closely tied with implementation and incentive and
financial policy, discussion of them is postponed un-
til the next chapter.

In summary, the importance of multiagency programs
is attested to first by the criticality of their

148

themes and the significant amounts of resources which
they command. At the same time, formal procedures
for multiagency planning techniques are a relatively
new development, still clearly undergoing modifica-
tion. Multiagency programs offer great potential for
improving coordination across organizational lines,
but they made create significant problems if merely
superimposed on the traditional branch planning struc-
ture. Soviet authorities recognize the importance of
careful integration of program and branch assignments
to avoid sending conflicting signals to the perform-
ing facility. Evidence is still fragmentary concern-
ing evaluation of the scope of application and manage-
ment of multiagency programs; therefore, it is unclear
whether the significant benefits of such programs are
being fully realized. It is also too early to tell
the extent to which the shift from coordination plans
to integrated programs overcomes some of the faulty
systems planning and management of the past.

THE DECISION TO IMPORT TECHNOLOGY

Though the Soviet Union has long imported technol-
ogy and machinery from abroad, the decision to ac-
quire foreign technology was not made until recently
an explicit and integral feature of R&D policy plan-
ning. A number of Soviet surveys conducted in the
mid-1960s disclosed that few research institutes pos-
sessed, much less used, comparative data on foreign
technology and Soviet products.11^ During the spring
meeting of the USSR Academy of Sciences in 1965, it
was noted that many of the items included in the plan
for new technology and slated for development by 1970
could, in fact, already be bought from the United
States, Japan, and Great Britain.11^ At this time
little attention was given to the purchase of foreign
patents and licenses or, for that matter, to the pro-
tection of Soviet inventions abroad. Only in July
1965 did the USSR begin to adhere to the Paris Conven-
tion for the protection of international property. In
general, the idea that it may be cheaper and more ef-

149

fective to borrow technology than to develop it do-
mestically is still somewhat novel for Soviet deci-
sion makers. As Robert W. Campbell points out, "They
have surely often thought it would be convenient to
solve some problem with foreign equipment, but the
notion of a conscious policy choice to be made rou-
tinely and systematically is probably still not very
common. mJ-

Three factors in particular have contributed to
this situation. First, the planning of R&D has been
oriented to building up S&T potential that can serve
as a basis for the solution of future problems. The
planning of technological innovation and utilization,
on the other hand, has been geared to solving current
production tasks. The two spheres of activity have
generally been decoupled, and each has proceeded more
or less on its own. Second, the time factor and the
"cost" of time have not figured prominently in R&D
decision making. Only since the late 1960s have ef-
forts been made to extend the time horizons of plan-
ners and to make the five-year plan rather than the
annual plan the basis for S&T problem-solving. Third,
the Soviet R&D establishment has been inward-looking
and has tended to display a "not -invented -here" sen-
timent. As a recent article in the Gosplan journal
noted,

There are more than a few examples where min-
istries and departments try for years to solve
through their own efforts problems that have
long been solved in other countries. In a num-
ber of cases the leaders and specialists of
certain scientific organizations consider the
decision to buy licenses as testimony regard-
ing their own S&T inadequacy. But only a pre-
cise and competent opinion as to how each item
and process compares with the world standard
and to its prospects for further improvement
should be an important consideration in the
decision to accelerate our own research and
development or turn to the acquisition of a
foreign license. H9

150

However, a former Soviet scientist now in Israel,
Professor M. Perakh, writes that there has been wide-
spread illicit use of foreign patents and know-how.
Soviet scientists often use, he claims, Western pat-
ents and other data as a basis for research proposals,
without acknowledging these sources to financing bod-
ies or to their administrative superiors. The R&D
then replicates results already achieved abroad with-
out superior authorities or potential Soviet users of
the R&D being aware of this fact. 120

In any case, the thrust of official policy in the
1970s was increasingly to make foreign technology ac-
quisition an explicit variable in R&D policy planning
and world standards a specific criterion for evaluat-
ing and improving Soviet R&D performance. This ap-
plies particularly to priority projects. Thus, the
division of the plan that deals with the basic S&T
problems includes a listing of the assignments that
are to be carried out on a collaborative basis with
other CEMA countries and those that are to be com-
pleted by means of foreign patents and technology. We
have also seen that the "technical level charts" de-
veloped for each priority problem require comparative
evaluations of the projected new technology with the
best domestic and foreign technology.

In addition, a special division devoted to the
sale of Soviet patents abroad and to the purchase of
foreign patents and technology has recently been ad-
ded to both the annual and five-year plans for devel-
opment of science and technology. This division fix-
es five year quotas for the receipts of foreign cur-
rency from sales of Soviet patents for the USSR as a
whole, for the republics, and for each ministry. Pro-
visions are established for each ministry to give
technical assistance to foreign firms in the assimi-
lation of technologies obtained under Soviet patents
and to deliver special equipment and materials for
startup of production. The plans for purchasing for-
eign licenses and technology stipulate the kinds of
technology to be imported and the amount of foreign
exchange required to pay for it. Ministerial plans
spell out in detail the foreign firms to be dealt

151

with, the types of patents and models to be acquired,
the equipment and materials needed for the assimila-
tion of foreign technology, requirements for capital
construction, the R&D performers and industrial fa-
cilities to be assigned to the adaptation and instal-
lation of the imported technology, legal rights and
obligations in the use of this technology, and the
estimated economic return from its adoption and dif-
fusion. At the same time, a determination must be
made of what scientific R&D projects should be termi-
nated after purchase of a foreign patent. 121

The extent to which these new procedures are ad-
hered to and the overall impact of changes in import
policy on the planning process are impossible to as-
sess from available information. Calculation of the
economic effectiveness of Soviet technology, we have
seen, is still fraught with many problems and defi-
ciencies. Methods and criteria for evaluating the
effectiveness of foreign technology and the compara-
tive advantage of borrowing from abroad or building
domestic capability are only beginning to be devel-
oped. According to one Western authority, "So far
it appears that planning calculations of this type
have had little role in the actual planning of ex-
ports and imports. "122 in addition, decisions to im-
port technology are still limited to high priority
problems and projects. For the bulk of Soviet R&D,
the inside-outside choice simply does not arise. Bor-
rowing is not a real option. -*

More generally, these changes in R&D policy plan-
ning have coincided with considerable expansion of
Soviet participation in international trade and tech-
nology transfer. Reasons for such expansion are typ-
ical: a combination of certain pressures which in-
duce international cooperation, such as global envi-
ronmental problems, and the standard benefits which
accrue to all who take part in the international di-
vision of labor in science and technology . 124 jn_
creasingly, Kremlin authorities have come to realize
that it is expensive — and not necessary — to reinvent
the wheel and to be self-sufficient in all areas of
science and engineering. They have also come to re-

152

gard the importation of modern equipment and foreign
know-how as an active force to improve the function-
ing of the Soviet economy and to accelerate its tech-
nological modernization, and no longer as just a sub-
sidiary source for supplementing domestic produc-
tion.1^5

The USSR is entering the world market to supply as
well as to acquire advanced technology. Increased
imports of technology have generated the need to ex-
pand Soviet export capacity in order to raise revenue
to pay for imports. Soviet leaders are also con-
vinced that they will be at a disadvantage until they
succeed in selling substantial amounts of machinery
and equipment to Western countries, in addition to
the raw materials and fuels which now make up the
bulk of Soviet exports. 12 6

Thus, the decision to borrow and the types of tech-
nology imported are heavily influenced by foreign ex-
change considerations. The oil and gas industry, for
example, has been one of the largest users of bor-
rowed technology, and Campbell notes that "part of
the rationale must surely be the combination of an
urgent pressure to expand output with a realization
that this expansion of output itself generates the
foreign exchange. "127 Similarly, in the coal indus-
try, he adds, recent decisions to import power shov-
els and large vehicles for open pit mining appear to
be strongly motivated by their role in assisting in
the expansion of exports. Other foreign equipment
and machinery, like automotive technology and some
computer-based systems, are acquired in part, it ap-
pears, to increase Soviet capacity for producing high
quality manufactured goods saleable on world markets.
On still another level, foreign trade considerations
are also important in determining some of the priori-
ty S&T problems. One of the recent 250 basic prob-
lems, for example, focused on the development of su-
per tankers with a capacity of more than 100,000 tons

Finally, it may be noted that Soviet policy on
technology transfer has itself undergone change in
recent years. Authorities have come increasingly to
realize that effective transfer requires a broad,

153

continuous flow of people and ideas rather than just
products. Thus, they have begun to adopt a systems
approach to transfer, absorption, and diffusion that
"involves not only machinery and plants but also
training, management, and foreign expertise or know-
how. "128 while the more traditional style — limited,
once-off machinery purchases, a good deal of litera-
ture scanning, imitative development, and reverse en-
gineering— probably continues, it is being supplemen-
ted by, if not giving way to, the new systems-orien-
ted policy. 129

Briefly, Soviet procedure for technology acquisi-
tion is as follows. Research, design, and production
facilities submit their requests to parent ministries,
which maintain special functional administrations to
handle imports and exports. The establishment may
have its own reserves of foreign currency to pay for
the acquisition, or it may apply for ministry or cen-
tral funds. In the latter case the requests are ex-
amined particularly carefully. Certain of the re-
quests, in turn, are forwarded to central management
agencies. Following selection of the desired commod-
ities and technologies, arrangements are made by the
responsible organs. The importation of products is
handled by foreign trade associations organized by
product line and subordinate to the Ministry of For-
eign Trade. Gosplan and Gossnab are involved because
imports must be accounted for in production and sup-
ply plans. The importation of licenses and other
"disembodied" technology is handled by Litsenzintorg,
also subordinate to the Ministry of Foreign Trade.
The GKNT is heavily involved in all decisions to im-
port foreign technology. Expected imports are incor-
porated in research, development, and implementation
plans in the same way as domestic technology. In
general, the whole foreign technology acquisition
process has been highly centralized. Only in recent
years have efforts been taken to break the tight mo-
nopoly of the Ministry of Foreign Trade and to en-
courage greater initiative by the ministries and low-
er-level facilities.

154

THE STRUCTURE AND CONTENT OF R&D PLANS

The previous discussion has described steps and
stages in the Soviet planning process at all levels
in the hierarchy. The culmination of the process is
of course the operational plan which, as noted, is
the fundamental mechanism for managing and coordina-
ting the activities of economic units. Indeed, the
deterministic and official character of such plans
needs to be emphasized. Their approval is not purely
symbolic; they are formally passed into law. While
today sanctions imposed when plans are not fulfilled
are rarely more severe than monetary penalties, the
penalties in foregone bonuses are large, and mana-
gerial careers are jeopardized.

Virtually all establishments and management organs
in the Soviet Union draft annual and five-year plans,
and most significant entities develop long-range
plans of varying durations, generally corresponding
to the nature of the subject matter and the forecast-
ing methods employed. For example, in the engineer-
ing industries in which tasks are fairly "concrete"
and technology may change rapidly, long-range plans
may be restricted to two years; for Academy and Min-
VUZ facilities long-range research plans may be de-
vised for 15 year periods. While the subject matter
in the plans of the respective hierarchies differs,
all sets of plans generally exhibit increasing detail
or "concreteness" and a growing orientation to eco-
nomic application with the shortening of the time ho-
rizon.

In the hierarchy of plans the state plan for de-
velopment of science and technology is of course su-
preme. The operational versions of this plan, the
five-year and annual plan, contain the following
chapters:

1. Assignments for solving the basic S&T problems

2. Work programs for introducing new types of
products and technological processes into
production

155

3. Production assimilation of new industrial
products

4. Introduction of advanced technological proces-
ses and mechanization and automation of pro-
duction processes

5. Sale of Soviet patents abroad, purchase of
foreign patents and models of new products,
and their utilization in the USSR national
economy

6. Introduction of computer technology into the
national economy

7. Establishment of state standards governing the
most important types of products and metrolo-
gical support of the national economy

8. Introduction of scientific organization of la-
bor

9. Basic indicators of the technical and economic
level of production and output

10. Financing of scientific research

11. Training of scientific personnel and science
teachers. 130

The content of each chapter is self-explanatory. Cer-
tain chapters are concerned with a general category
of R&D, such as the introduction of new products;
some pertain to a special category, such as licensing
or the application of computer technology; and still
others focus on the establishment of operating and
evaluative criteria, such as standards and technical
indicators, which support the remaining chapters. In
addition, the universal correspondence between phys-
ical and financial flows is exemplified by inclusion
of the financial plan.

At the stage of the intermediate level management
organs, plans become more concrete. Plans incorpo-

156

rate targets specified in chapters of the national
plan, but are organized differently in relation to
the character of the R&D in the hierarchy. In the
Academy and university systems, the program or pro-
ject is the centerpiece of the plan, with most indi-
cators concerned with measures of inputs (e.g., wage
funds) and the scheduling of work. Emphasis is also
placed on specifying the ultimate user of results,
and calculations of economic return are required
where possible. Plans in industrial ministries are
oriented to the application and introduction of R&D
results. Branch plans contain divisions that corre-
spond to and derive from the macro state plan divi-
sions for the assimilation of production of new types
of products and the introduction of new processes.
There are also divisions for improving the stock of
equipment, the organization of production, and the
quality of output. The annual plans of the branch
ministries also include a special division for sci-
entific research and test-design, which lists the R&D
assignments under the special programs for solving
the basic S&T problems.

At the performer level in the hierarchy, the struc-
ture and content of plans correspond to the orienta-
tion of the superior organization's plan and the char-
acter of R&D activity. Independent research and de-
sign facilities draft five-year and annual "thematic"
or project plans in which the central object is the
research project. Nolting observes, "There are no
standard methods and forms for drawing up project
plans among scientific organizations that are under
different ministries and perform different kinds of
work, but there is a basic procedure and set of re-
quirements. "131 in general, project plans have two
main sections: one for R&D conducted within the fa-
cility, the other for assimilation of finished R&D to
be transferred to the appropriate production organi-
zations with the advice and assistance of the scien-
tific facility. 132 Information in the yearly pro-
jects plan includes the following: the general vol-
ume of scientific research and experimental design
work for the plan year; the expected economic return;
the periods for completion of work on each project;

157

estimated costs; the sources of financing; the ra-
tionale for including the work in the plan; and the
designation of the industrial enterprise to receive
the R&D results for application. ^-* The emphasis on
defining ultimate uses is apparent and is to some ex-
tent a new element , at least in degree . Along with
the thematic plan, a "calendar" plan is developed
which schedules work by stages and designates per-
formers and inputs.

In the production enterprise, the "plan for in-
creasing the efficiency of production" or, as it is
generally called, "the new technology plan" carries
through the applied orientation reflected in the min-
istry's plan. In the past, five-year plans of this
sort were drawn up only in the larger enterprises or
production associations. With the Tenth Five Year
Plan, however, they have apparently become mandatory
for all enterprises. 134 The annual enterprise new
technology plan, which has been a basic feature of
Soviet planning since the late 1920s, is drafted in
minute detail and contains the following subdivi-
sions:

1. Assimilation of new types of products and im-
provement of the quality of production

2. Introduction of advanced technological proces-
ses and mechanization and automation of pro-
duction

3. Introduction of scientific organization of
labor

4. Improvement of the organization, planning, and
management of production

5. Scientific research and experimental design

6. Basic indicators of the technical and economic
level of production and output

7. Protection of the environment and rational use
of material resources. 135

158

In each subdivision the documentation required on a
project basis is extensive and similar in scope to
the other examples already cited.

THE PLANNING SYSTEM AND ITS PARTS

In principle, these numerous sets of plans, dif-
ferentiated along temporal and organizational lines
as well as hierarchical branch and functional program
lines, form an internally consistent and well inte-
grated "system" of plans regulating the research-to-
production cycle. In practice, however, there are
many "holes in the whole," and coordination falls
far short of its target. Given the scope and compre-
hensiveness of Soviet planning, this is not surpris-
ing. Perfect coordination is unlikely in any system,
partly because of the unpredictability of the results
of scientific research and development. But as Nol-
ting observes, "Soviet R&D planning has been poorly

coordinated even if judged by standards less than
ideal. "136

Only since the late 1960s, it may be recalled,
have Kremlin authorities pursued a policy of inte-
grated systems planning of R&D, innovation, and pro-
duction. Even today such a policy is applied, for
the most part, only in high priority projects. Soviet
planning is generally still of two kinds: "compila-
tion planning" and "implementation planning." The
former involves primarily a listing of assignments
while the latter entails more systematic and delib-
erate efforts to specify targets, to assign respon-
sible performers, and to coordinate tasks. Implemen-
tation planning is limited primarily to the inter-
branch S&T programs of national priority and to the
continuous plans in certain branch ministries. Com-
pilation planning remains the predominant form with
results that are less than optimal. Again Nolting
provides the best description of the system:

RDI Cresearch-development-innovationU plan-
ning has often amounted to little more than

159

a simple listing of projects to be carried
out without relating them to broader pur-
poses. In large part the projects are sug-
gested by lower units in the planning chain
and reflect the interests and expertise of
performing organizations. Many such pro-
jects are reported to be trivial and mar-
ginal in their technological benefits. The
proposals submitted by lower echelons are
not always properly screened and those ac-
cepted are not worked into coherent plans
consistent with the general technological
directions of the higher planning echelons.
In other words, RDI plans tend to be accu-
mulations rather than syntheses. 137

The demand for techniques to view projects in a
total systems perspective is clearly felt and pro-
vides the impetus behind the systems movement in So-
viet science policy today. Network planning and pro-
gramming methods enable decision makers to perceive
projects more broadly as systems and to depict the
interrelationships among tasks to be performed. In
general, though, these are still new and untested
tools. "Many deficiencies in planning scientific
and technical progress," explains one Soviet science
policy expert, "are rooted in the lack of apprecia-
tion of programming methods and in the narrow front
of their application. "138 Even for basic S&T prob-
lems, systems planning is still very much an evolv-
ing technique. A deputy director and research ana-
lyst at Gosplan's Central Scientific Research Insti-
tute of Economics acknowledge, "We have still not ac-
cumulated sufficient experience in drawing up long-
term S&T programs. It is possible to say that the
formulation of programs in most cases is still in the
formative stage. "139 On the branch level, too, prog-
ress has been slow and limited in developing program-
type planning. By 1974 only three ministries had
transferred to the system of continuous planning,
though by 1978 this number had climbed to 11. The
rest continue to plan R&D largely around separate
organizations rather than broad programs.

160

On another level, complaints continue that R&D
plans are inadequately coordinated with production
plans. Organizationally, these two spheres of plan-
ning remain compartmentalized in different functional
administrations within the ministerial structure. The
creation and application of new technology is parti-
tioned off from general economy activity. 140 Overall,
the planning process and its outcomes continue to re-
flect the fact that science and industry are still
largely separate worlds in the Soviet Union.

Centralized financing also continues to be defi-
cient as an integrating instrument in R&D planning
and management, especially of major interbranch pro-
jects. In the Eighth Five Year Plan, budgetary funds
for a given coordination plan were allocated through
standard channels to all the participating ministries.
Such a procedure resulted in multiple sources of fund-
ing and fragmented administration of plans. Accord-
ingly, the procedure was changed in the Ninth Plan,
and the entire budgetary allocation for a coordina-
tion plan was assigned to the lead agency in charge
of the plan. All nonbudgetary sources of financing
the plan were also placed under control of the head
ministry , which was authorized to distribute funds
to individual performers in other ministries through
contracts. 1^1 This is still the practice today.

Nonetheless, problems remain. Technically, the
allocations for basic S&T problems cannot be directed
to other projects without approval of the GKNT; they
must be used according to the principle of "the mon-
ey to the problem." In practice, however, these funds
are diverted and used sometimes for other purposes.
"Centralized financing is often replaced by decen-
tralized financing," asserts M. P. Ring. Criticiz-
ing the existing method of aggregate bloc financing,
he suggests that a system of "incremental financing"
be introduced for these expensive and long-term pro-
grams that would relate budgeting more closely to ac-
tual results and tie decision making more effectively
to cost, uncertainty, and risk.l^

161

Finally, integration of plans and programs is im-
peded by limitations and gaps in the analytical base
underpinning science policy. To be sure, some prog-
ress has been made over the past decade in both re-
fining and broadening the criteria for deciding prob-
lems of choice. Awareness of the parameters of "time"
and "cost" has particularly increased in R&D decision
making. The principle of "better late than never,"
which prevailed largely in the past, is being replaced
by "either on time or not at all" as the issue of ob-
solescence becomes increasingly important. At the
same time, technical progress "at any price" is being
questioned and rejected, at least in some science
policy circles, as the squeeze on resources grows.
More and more, available means determine possible
goals; alternative futures have to be weighed in
terms of their comparative costs and benefits. In
addition to the economic dimensions of cost, the so-
cial and ecological ramifications of technological
undertakings are beginning to be weighed in the de-
cision calculus. More scientific forecasting and
long-range strategic planning are perceived as imper-
ative. Much as in the West, the whole thrust of re-
cent Soviet planning, forecasting, and goal-setting
in the area of science and technology is to reduce
uncertainty, to anticipate contingency, and to pro-
vide a greater sense of purpose and direction.

The growing complexity of contemporary problems in
science, technology, and production has exposed the
inadequacy of traditional planning methods and eval-
uative indicators. Today the articles manufactured
by any branch are so diverse and the technologies
for their production so numerous that evaluating the
activity of a modern enterprise according to prevail-
ing gross output and simple aggregate indices is
"like judging a painting by the weight of the paint
used or the area of the canvas it covers," noted a
recent article in Pravda.1^3 ^,t the same time, the
inadequacy of technique applies to the new methods
of planning as well as to the old. The former are
still in the process of evolution as the search con-
tinues for more sophisticated ways to integrate com-
plexity and to respond to the new claims of efficien-

162

cy and quality. Adequate procedures have not yet
been found for calculating the "cost/benefit ratio,"
"economic return," and "social effectiveness" of R&D.
The new technical indicators policy is still in the
experimental stage.

Hence, rough rule-of -thumb methods are likely to
dominate S&T decision making for some time. They are
indeed an inevitable and integral feature of managing
multiparticipant decision analysis in all societies.
Even the arrival of more "powerful" modern planning
techniques will not appreciably alter the basic po-
litical character of the Soviet decision process. As
a former Soviet planning specialist now in emigration
recently observed about the system, "The iterative
process, balancing, 'coming to agreement' does in
fact occur but not on paper, not in calculation, but
in life itself. "144

163

FOOTNOTES

1. 0. I. Larichev, "Dostoinstva i nedostatki sis-
temnogo podkhoda k planirovaniyu i upravleniyu nauch-
nymi issledovaniyami, vklyuchaya analiz f stoimost-ef-
fektivnost '"(Merits and Defects of the Systems Ap-
proach to Planning and Management of Scientific Re-
search including Cost-Effectiveness Analysis"), p. 4.
Soviet Side of the Joint Soviet-American Working Sub-
group on Planning and Management of Scientific Re-
search and Development. Unpublished (draft) paper,
1976.

2. Louvan Nolting, The Planning of Research, De-
velopment, and Innovation in the USSR, U.S. Depart-
ment of Commerce, Foreign Economic Report No. 14
(Washington, D.C., 1978), p. 1.

3. See Yu. M. Kanygin, Nauchno-tekhnicheskiy po-
tentsial (Problemy nakupleniya i ispol'zovaniya)
(Novosibirsk: Nauka, 1974), pp. 157-159, 179-182 and
also his Nauchno-proizvodstvennyi tsikl: Voprosy teo-
rii i organizatsii (Novosibirsk: Nauka, 1971).

4. Yu. Kanygin and S. Kostanyan, "Nauchno-proiz-
vodstvennyi tsikl," Voprosy ekonomiki, 12 (1976), p.
62.

5. Louvan E. Nolting, Sources of Financing The
Stages of the Research, Development, and Innovation
Cycle in the USSR, U.S. Department of Commerce, For-
eign Economic Reports No. 3 (Washington, D.C., 1973),
p. 3.

6 . V . Yu . Budavey and M . I . Panova , Ekonomiches-
kiye problemy tekhnicheskogo progressa (Moscow: Mysl1 ,
1974), p. 19.

7. N. M. Oznobin and A. S. Pavlov, Kompleksnoye
planirovaniye nauchno-tekhnicheskogo progressa (Mos-
cow: Mysl', 1975), pp. 155-156.

8. L. Sh. Gaft and Ya. S. Krasov, Podsistema uprav-

164

leniya nauchno-issledovatel'skimi rabotami v otrasli
(Moscow, 1976), p. 53; P. N. Zavlin, A. I. Shcherba-
kov, and M. A. Yudelevich, Trud v sfere nauki (Moscow:
Ekonomika, 1973), p. 247; M. S/Mintairov, E. B. Fokko,
0. E. Kovalevskiy, and A. A. Nikonov, "Planirovaniye
zatrat na nauku na osnove normativnogo metoda," in
Problemy deyatel'nosti uchenogo i nauchnykh kollek-
tivov (Leningrad-Moscow, 1977), p. 29.

9. Leonid Kantorovich, "Economic Problems of Sci-
entific and Technical Progress," Social Sciences, 3
(1976), p. 87.

10. S. Golosovskiy and G. Yeremenko, "Measuring the
Effectiveness of Scientific and Technical Progress,"
Voprosy ekonomiki, 12 (1975), pp. 142-145. See also
B. Zaytsev, "Voprosy ucheta zatrat na issledovaniya i
razrabotki," Vestnik statistiki, 1 (1977), pp. 10-14.

11. Gaft and Krasov, op. cit., p. 53.

12. B. Z. Milner, "Sovershenstvovaniye organiza-
tsionnykh struktur upravleniya," in Sovremennye me-
tody upravleniya narodnym khozyaystvom (Vilnius: Lit-
ovskiy Nauchno-Issledovatel'skiy Institute Nauchno-
Tekhnicheskoy Informatsii i Tekhniko-Ekonomicheskikh
Issledovanii, 1974), pp. 4-5.

13. Statement by N. P. Lebedinskiy to a group of
American specialists visting the USSR in the fall of
1974 as part of the Joint US-USSR Science Policy Work-
ing Group.

14. Milner, op. cit. , p. 4.

15. See, for example, I. P. Kozlov, V. P. Vorobyev,
and A. S. Korotkov, "Voprosy metodologii analiza deya-
tel'nosti otraslevoy nauchnoy organizatsii," in Prob-
lemy deyatel'nosti uchenogo i nauchnykh kollektivov
(1977), pp. 78-81 and Oznobin and Pavlov, op. cit.,
pp. 148-149.

16. M. L. Bashin, Planirovaniye rabot otraslevykh
Nil i KB (Moscow: Ekonomika, 1973), p. 171.

165

17. M. G. Kolodnyy and A. P. Stepanov, Planiro-
vaniye narodnogo khozyaystva SSSR (Kiev, 1975), p. 90.

18. Valuyev et al, "Unique Characteristics of the
Financing of Science in the USSR," (Russian text),
p. 43.

19. "Official" science expenditures in the USSR

do not include outlays on (1) R&D performed by enter-
prise scientific subdivisions in most ministries; (2)
development and testing of "industrial" prototypes
under factory conditions; (3) scientific and techni-
cal assistance to and collaboration with enterprises
by branch, academy, and VUZ scientific organizations;
(4) R&D financed under special innovation funds in
industry or under capital investments in economic
branches; (5) the portion of VUZy R&D financed under
the specific budgetary allocation for VUZy; and (6)
probably some categories of military and space R&D.
See Louvan Nolting, The Financing of Research, Devel-
opment, and Innovation in the USSR, by Type of Insti-
tutional Performer, pp. 2-3.

20. Nolting notes that "These investments are not
confirmed or allocated specifically as investments in
science, but rather as investments attributed to per-
tinent economic branches, although the investments
are monitored and audited by the State Committee for
Science and Technology*" See ibid. , p. 26.

21. Ibid., pp. 17-19.

22. "Unique Characteristics of the Financing of
Science in the USSR," p. 48.

23. V. I. Kushlin, Uskoreniye vnedreniya nauchnykh
dostizheniy v proizvodstvo (Moscow: Ekonomika, 1977),
p. 138.

24. Gvishiani, "Centralized Management of Science:
Advantages and Problems," p. 77.

25. Helgard Wienert, "The Organization and Planning
of Research in the Academy System," in Zaleski et al,

166

Science Policy in the USSR, p. 250.

26. Helgard Wiener t, "The Organization and Planning
of Research in the Higher Educational Establishments,"
ibid. , p. 354.

27. Eugene Zaleski, "Central Planning of Research
and Development in the Soviet Union," ibid. , p. 42.

28. Zavlin et al, Trud v sfere nauki (Novosibirsk:
Nauka, 1971), p.

29. G. S. Pospelov, "Management and the Pace of the
Age," Izvestiya, March 21, 1974.

30. E. 1. Voyevodova and A. D. Zusman, "Nekotoryye
voprosy sistemnogo podkhoda k ekonomicheskim aspektam
deyatel'nosti nauchno-issledovatel' skoy organizatsii,"
in Problemy deyatel'nosti uchenogo i nauchnykh kollek-
tivov (1977), p. 56.

31. A. M. Birman, "What Finance Can Achieve," Eko-
nomika i organizatsiya promyshlennogo proizvodstva,

1 (1978), p.

32. Pospelov, op. cit.

33. K. A. Yefimov, G. Ya. Kiperman, and G. M. Fedo-
tov, "Development and Realization of Programs of Com-
plex Mechanization of Fundamental and Auxiliary Pro-
cesses of Production at the Moscow Production Asso-
ciation ZIL," p. 5. Soviet Side of the Joint Soviet-
American Working Subgroup on Planning and Management
of Scientific Research and Development. Unpublished
(draft) paper, 1976.

34. B. E. Paton, "Ef fektivnost ' nauchnykh issledo-
vaniy i uskoreniye protsessa vnedreniya," Vestnik
Akademii Nauk SSSR, 2 (1977), p. 50.

35. Ibid. ; Kushlin, op. cit. , p. 138.

36. Nolting, The Financing of Research, Development,
and Innovation in the USSR, pp. 29-30.

167

37. B. Labkovsky, "Higher Schools Help Science,
Science Helps Higher School," Izvestiya, May 20,
1976.

38. Nolting, The Financing of Research, Development,
and Innovation in the USSR, pp. 33-35.

39. Berliner, The Innovation Decision in Soviet In-
dustry, p. 174.

40. B. A. Raizberg, E. P. Golubkov, and L. S. Pekar-
skiy, Sistemnyi podkhod v perspektivnom planirovanii
(Moscow, 1975), p. 128.

41. N. P. Fedorenko, "Urgent Tasks of Economic Sci-
ence," Ekonomicheskaya gazeta, 21 (May 1976), p. 10.

42. Zaleski et al, Science Policy in the USSR, p.
83.

43. I. Fetisov, "The Sales Service," Izvestiya,
April 16, 1976.

44. V. Semenov, "Laboratory for Rent," Pravda, Sep-
tember 6, 1973.

45. I. Fetisov, "Put Resources in a Single Pair of
Hands," ibid., August 1, 1976.

46. Fetisov, "The Sales Service."

47. Ya. D. Gartsman and V. M. Ignatenko, "Sover-
shenstvovaniye planirovaniya nauchno-issledovatel'-
skikh rabot v minis terstvakh i vedomstvakh," in Ekon-
omicheskiye problemy nauchno-tekhnicheskogo progressa
v narodnom khozyaystve USSR (Kiev, 1974), pp. 14-15.

48. Metodicheskiye ukazaniya k razrabotke gosudarst-
vennykh planov razvitiya narodnogo khozyaystva SSSR
(Moscow: Ekonomika, 1974), p. 9.

49. "USSR Short Answers," p. 27.

50. Nolting, The Planning of Research, Development,
and Innovation in the USSR, pp. 6, 10, 17.

168

51. Ibid., pp. 17-18.

52. Budavey and Panova, op. cit. , p. 186.

53. Nolting, The Planning of Research, Development,
and Innovation in the USSR, pp. 14-15.

54. Ibid., p. 15.

55. Ibid. , p. 24; Thomas and Kruse-Vaucienne, So-
Science and Technology, pp. 247-248.

56. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p. 5 .

57. Budavey and Panova, op. cit . , p. 187; Yu. A.
Zykov, "Nekotoryye metodologicheskiye voprosy postro-
yeniya sistemy ekonomicheskikh prognozov nauchno-tekh-
nicheskogo progressa," in L. M. Gatovskiy, ed., Ekon-
omicheskiye problemy nauchno-tekhnicheskoy revolyutsii
pri sotsializme (Moscow: Ekonomika, 1975), pp. 173-
182.

58. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p . 15 .

59. Thomas and Kruse-Vaucienne, Soviet Science and
Technology, pp. 246-248, 278.

60. "USSR Short Answers," pp. 18, 20, 32.

61. V. Disson, "Primeneniye programmno-tselevogo
metoda pri reshenii nauchno-tekhnicheskikh problem,"
Planovoye khozyaystvo, 7 (1977), p. 74.

62. Ye. V. Kosov and G. Kh. Popov, Upravleniye
Mezhotraslevymi nauchno-tekhnicheskimi programmami
(Moscow: Ekonomika, 1972), pp. 42-43.

63. V. Disson, "From Idea to Production Line," Iz-
vestiya, January 20, 1976 and V. Kirillin, "Programmy
nauchno-tekhnicheskogo progressa," ibid. , May 15, 1976.

64. See M. Vilenskiy, "Tekhnicheskiy progress v

169

desyatoy pyatiletke," Voprosy ekonomiki, 11 (1976),
pp. 47-55; Disson, "Primeneniye programmno-tselevogo
metoda," pp. 74-75; "USSR Short Answers," p. 18.

65. Larichev, "Dostoinstva i nedostatki sistemnogo
podkhoda k planirovaniyu i upravleniyu nauchnymi is-
sledovaniyami, vklyuchaya analiz f stoimost f-ef fektiv-
nost' ,,w p. 5.

66. Peter L. Kapitsa, "Scientific Policy in the
USSR: The Scientist and the Plans," Minerva (Summer
1966), p. 559.

67. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p. 1.

68. Larichev, op. cit . , p. 8.

69. Ibid., pp. 7-8.

70. Kapitsa, op. cit., p. 558.

71. Vestnik Akademii Nauk SSSR, 2 (1965), p. 16.

72. V. A. Kirillin, "Nazrevshiye problemy tekhni-
cheskogo progressa," Ekonomicheskaya gazeta, 21 (May
1968), p. 12.

73. Ye. V. Kosov, "Ekonomicheskiye problemy uprav-
leniya nauchno-tekhnicheskim razvitiyem narodnogo
khozyaystva," in Nauchnoye upravleniye obshchestvom
(Moscow, 1971), V, p. 114.

74. Ibid., p. 115.

75. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p. 16; "USSR Short An-
swers," p. 32.

76. L. Glyazer, "The Economics of Science and the
Science of Economics," Voprosy ekonomiki, 6 (1973),
reprinted in The Soviet Review, XV, 1 (Spring 1974),
p. 45.

170

77. Ibid., p. 37.

78. Cited in Nolting, The Planning of Research, De-
velopment, and Innovation in the USSR, p. 6.

79. Disson, "Primeneniye programmno-tselevogo metoda
pri reshenii nauchno-tekhnicheskikh problem," pp. 81-
82.

80. Kosov and Popov, op. cit., pp. 44-57.

81. See 0. I. Volkov, Planovoye upravleniye nauchno-
tekhnicheskim progressom (Moscow: Nauka, 1975), p. 153;
B. F. Zaytsev and B. A. Lap in, Organizatsiya planiro-
vaniya nauchno-tekhnicheskogo progressa (Moscow: Ekon-
omika, 1970), p. 213.

82. V. N. Arkhangel'skiy, Planirovaniye i finansiro-
vaniye nauchnykh issledovaniy (Moscow: Finansy, 1976),
p. 61.

83. K. A. Yefimov et al, op. cit., p. 2.

84. These percentages are cited by Vilenskiy in his
article discussing the new 200 S&T programs. See his
"Tekhnicheskiy progress v desyatoy pyatiletke," p. 50.

85. V. I. Vodichev, S. P. Goncharov, V. I. Dobro-
khotov, E. K. Kuznetsov, and N. I. Serebryanikov,
"Razrabotka i vnedreniye teplof ikatsionnykh turbin
moshchnost'yu 250 tys. kvt" (The Development and
Adoption of Combined Heat and Power Supply Turbines
with a Capacity of 250,000 Kilowatts), p. 4. Soviet
Side of the Soviet-American Working Subgroup on Plan-
ning and Management of Scientific Research and Devel-
opment. Unpublished (draft) paper, 1976.

86. N. P. Fedorenko, "Urgent Tasks of Economic Sci-
ence," Ekonomicheskaya gazeta, 21 (May 1976), p. 10.

87. Nolting, The Planning of Research, Development,
and Innovation in the USSR, pp. 3, 6, 12.

88. Kosov and Popov, op. cit. , pp. 48-49.

171

89. M. P. Ring, "Problemnoye upravleniye v nauke:
pravovyye aspekty," Vestnik Akademii Nauk SSSR, 7
(1976), pp. 15-16, 18.

90. G. Kh. Popov, Effektivnoye upravleniye, pp. 24-
25.

91. Disson, "Primeneniye programmno-tselevogo me-
toda," p. 75.

92. See the discussion in Ronald Amann, Julian Coop- j
er, and R. W. Davies, eds., The Technological Level of
Soviet Industry (New Haven and London: Yale University
Press, 1976), pp. 61-62.

93. Ibid., pp. 52-58.

94. Ibid., p. 62

95. Nolting, The Planning of Research, Development,
and Innovation, p . 6 .

96. Amann et al, op. cit . , pp. 62-63.

97. Zaleski et al, Science Policy in the USSR,
p. 82.

98. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p . 16 .

99. This discussion of the role of "basic directions'
draws on the excellent study by John Young and Andrew
Hull, Main Directions as an Instrument in the Plan-
ning and Management of Soviet Science Policy, Battelle
Columbus Laboratories (Columbus, Ohio, 1976).

100. Ibid., p. 7.

101. Pravda, October 8, 1975.

102. "USSR Short Answers," p. 96.

103. Zaleski et al, Science Policy in the USSR,
p. 466.

172

104. Labkovskiy, "Higher Schools Help Science, Sci-
ence Helps the Higher School."

105. G. I. Levi, "Neprostoy put' vnedreniya," Vest-
nik Akademii Nauk SSSR, 2 (1977), p. 11.

106. See the editorials, "Supply and Production,"
Pravda, September 9, 1976, and "Strict Schedule for
Supplies," ibid., May 16, 1977.

107. Zaytsev and Lapin, op. cit. , pp. 129-130, 140.

108. See G. A. Dzhavadov, Upravleniye nauchno-tekh-
nicheskim progressom, p. 14; E. S. Rakhmatullina, ed.,
Strategiya i taktika kommunisticheskikh partii (Alma
Ata, 1974), p. 15; P. Fedoseyev, "Krepit' svyazi nau-
ki i praktiki," Kommunist, 9 (1976), p. 38.

109. Disson, "Primeneniye programmno-tselevogo me-
toda," p. 76.

110. Vodichev et al, op. cit., pp. 8-9.

111. Ibid., pp. 12-13.

112. Nolting, The Planning of Research, Development,
and Innovation in the USSR, p. 11.

113. M. A. Gusakov, "Tekhnika programmno-tselevogo
metoda planirovaniya," in S. S. Kugel' , ed., Problemy
deyatel'nosti uchenogo i nauchnykh kollektivov (Lenin-
grad-Moscow, 1973), p. 242.

114. Disson, "Primeneniye programmno-tselevogo me-
toda," pp. 77-79.

115. Nolting, The Planning of Research, Develop-
ment, and Innovation in the USSR, p. 19.

116. Zaleski et al, Science Policy in the USSR,
p. 396.

117. Statement by Dr. I. L. Mandelshtam in Vestnik
Akademii Nauk SSSR, 6 (1965), p. 17.

173

118. Robert W. Campbell, "Issues in Soviet R&D: The
Energy Case," in Joint Economic Committee, Soviet Eco-
nomy in a New Perspective (Washington, D.C., 1976),

p. 111.

119. Planovoye khozyaystvo, 11 (1975), p. 8.

120. M. Perakh, "Utilization of Western Technologi-
cal Advances in Soviet Industry," NATO Economic Direc-
torate Colloquium, 1976, cited in Philip Hanson, "In-
ternational Technology Transfer from the West to the
USSR," in Soviet Economy in a New Perspective, p. 806.

121. Nolting, The Planning of Research, Development,
and Innovation, p. 17 and Metodicheskiye ukazaniya
(1974), pp. 17-19.

122. Jack Brougher, "USSR Foreign Trade: A Greater
Role for Trade with the West," in Soviet Economy in a
New Perspective, p. 686.

123. Campbell, op. cit., p. 111.

124. Ivanov, "Overcoming Obstacles and Improving
Incentives in the Introduction of New Technology and
New Methods of Management," p. 5.

125. Brougher, op. cit. , p. 685.

126. Ibid., p. 679.

127. Campbell, op. cit. , p. 112.

128. John P. Hardt, "The Role of Western Technology
in Soviet Economic Plans," NATO Directorate of Econom-
ic Affairs Colloquium, 1976, pp. 9-12.

129. See Hanson, op. cit. , pp. 786-812.

130. Metodicheskiye ukazaniya (1974) , pp. 9-10.

131. Nolting, The Planning of Research, Develop-
ment, and Innovation in the USSR, p . 19 .

174

132. Ibid. , p. 21.

133. Bashin, Planirovaniye rabot otraslevykh Nil i
KB, p. 53.

134. Nolting, The Planning of Research, Develop-
ment, and Innovation in the USSR, pp. 21-22.

135. Tipovaya metodika razrabotki pyatiletnogo plana
proizvodstvennogo obyedineniya (Kombinata) , predpri-
yatiya (Moscow, 1975), p. 28.

136. Nolting, The Planning of Research, Develop-
ment, and Innovation in the USSR, p. 4.

137. Ibid.

138. V. Budavey, "Kompleksnoye planirovaniye nauch—-
no-tekhnicheskogo progressa," Voprosy ekonomiki, 11
(1975), p. 18.

139. Budavey and Panova, op. cit., p. 181.

140. M. Vilenskiy, "Planirovaniye effekta nauchno-
tekhnicheskogo progressa," Voprosy ekonomiki, 1 (1978),
pp. 106-107.

141. Nolting, The Planning of Research, Develop-
ment, and Innovation in the USSR, p. 11.

142. Ring, "Problemnoye upravleniye v nauke: pravo-
vyye aspekty," pp. 30-31.

143. Ya. Vladychin and I. Syrayezhin, "According to
Tomorrow's Normatives," Pravda, May 7, 1977.

144. Igor Berman, "From the Achieved Level," Soviet
Studies, XXX, 2 (April 1978), p. 167.

175

X THE EXECUTION OF R&D PLANS
AND THE UTILIZATION OF RESULTS

As we have seen, the R&D plan commits the research
institute, design bureau, and production enterprise
to a comprehensive and detailed set of technical and
economic objectives. The annual plan, subdivided in-
to quarterly and monthly targets, is the basic opera-
tional document. It has the force of law, and is the
principal stimulus to implementation.

Although certain objectives are imposed by superi-
or organs, and the plan must be approved in detail by
superior authorities, the performer establishment
manager does participate in plan formulation. The
manager has a certain degree of autonomy, especially
compared to earlier periods of Soviet history, but he
still lacks one common ingredient of autonomy: flexi-
bility. Even if the approval by superiors is merely
pro forma, the manager is still committed to the plan
for its duration. Only rarely are superior bodies
inclined to permit alterations in annual plan targets.
They discourage the raising and reducing of targets
because such actions can reverberate and disrupt the
economy. The plan is thus ambitious and inflexible:
this consideration alone fosters conservatism and
works against unpredictable activities like R&D.

In this chapter we look at control mechanisms and
incentive systems used to put the plan into practice.
In their detail and comprehensiveness, plans provide
more than general directions for the performer estab-
lishment. Yet the manager still exercises discretion
in decisions concerning how plan tasks can be accom-
plished. To aid the manager in selecting the most
effective means of fulfillment, the state has creat-
ed an organizational structure and a set of decision
rules aimed at engendering strong effort and effec-
tiveness. Such incentives as the size of expected

176

bonus funds with plan fulfillment are also incorpo-
rated formally in plans, although these are derived
mainly post facto by application of formulas to
match indicators against actual establishment per-
formance. Organizational, economic, and managerial
mechanisms for plan implementation, like the plan
targets themselves, should of course be internally
consistent and move the establishment on the track
desired by the central leadership.

In practice, however, the plan and the machinery
for its execution frequently break down. The trans-
lation of scientific ideas into new products and pro-
cesses becomes an obstacle course of endless delays
and difficulties. During the 1960s losses due to the
slow transfer of R&D results into use ran between six
and eight billion rubles a year, or the equivalent of
one-fifth of all funds allocated for innovation. For
the period of the Seventh Five Year Plan (1959-1965)
these losses amounted to about half of the total in-
vestment in scientific research and development. It
is estimated that an additional five to six billion
rubles can be saved annually if the time lag for in-
novation is reduced by just one year. Even now not
more than 30 to 50 percent of completed R&D finds its
way into production. The remainder is either not
used at all or assimilated so slowly that it is al-
ready obsolete by the time of its introduction. In
certain fields as much as 80 percent of finished R&D
falls by the wayside without practical utilization. 1
Clearly, a major challenge facing Kremlin leaders to-
day consists in formulating a science policy to en-
courage innovation and the utilization of S&T results

MANAGING THE RESEARCH-TO-PRODUCTION CYCLE:

AN OVERVIEW

Technological innovation in the Soviet Union at
present is essentially a bureaucratic function, with
situations referred upward through long organization-
al lines for resolution. Individual and institution-
al performers rarely collaborate directly. Most ex-

177

ternal transactions among organizations are managed
through ministerial offices and departmental chan-
nels. A research institute or design bureau, for ex-
ample, reports its results to a technical administra-
tion, branch glavki, or industrial association to
which it is subordinate. The latter, in turn, de-
cides on what should be the next phase of work, by
whom, and where.

This structure impedes innovation in at least two
important ways. First, the long approval route de-
lays decisions and prolongs the research-to-produc-
tion cycle. To create a new machine, for example,
requires typically 25 approvals at different levels.
To build a new technological system of 10 to 15 ma-
chines and mechanisms may require as many as 400 to
500 clearances.2 In general these agreements are ob-
tained sequentially and not in parallel. 3 Forward
movement is constantly stalled by rounds of negotia-
tion; by waiting for approval of reports by depart-
mental and interdepartmental expert commissions or
for the return of tests on prototypes; by the absence
of supplies, equipment, and financing; by the need to
find the right customer with the appropriate experi-
mental base. Considerable time is spent on corre-
spondence and on trips to ministries in pursuit of
support for innovation. The path from conception to
commercialization can be especially long and precari-
ous if the technology entails new processes or prod-
ucts unrelated to established interests and activi-
ties or if it involves much interbranch negotiation.
The effort devoted to gathering signatures of approv-
al is due in part to statutory regulations. However,
it also serves, Berliner explains, "as a device for
limiting each organization's responsibility for its
own stage of the work and for reducing one's vulnera-
bility in the event of difficulties encountered in
later stages."^

According to studies by the State Committee for
Science and Technology it frequently takes as much
time to secure agreements and to transfer documents
from one organization to another as it does to con^
duct the necessary scientific development.^ That is,
the bureaucratic process of moving research results

178

consumes as much time as the research and development
process itself. Even excellent ideas must stand in
line to be included in the work plan of the organiza-
tion designated to conduct the next phase of the pro-
cess. Such ideas, too, sometimes fail to pass the
approval stage. Among the nearly 700 completed R&D
projects proposed by the Siberian Division of the
USSR Academy of Sciences for practical use between
1960 and 1970 but were not introduced, about 40 per-
cent had become obsolete while waiting for higher ap-
proval."

Second, the quality of decision making is reduced
because the structure forces decisions to the highest
levels away from the information and knowledge that
are most relevant to deal with them. Each additional
level distorts objectives and misdirects attention.
The vision of individuals and managerial units is di-
rected toward separate efforts rather than the over-
all enterprise, results, and performance. Structure
and procedure also tend to focus attention on wrong
issues, such as jurisdictional disputes, formal plan
fulfillment, and the avoidance of risk. All along
the line there is constant danger a project will lose
momentum and fall into incompetent or unsympathetic
hands.

These obstacles assume special importance in the
branch ministries where the managers are appreciably
less qualified than in the Academy system. Scientists
themselves manage academic science, and it is not
nearly as fragmented and hampered by departmental
limitations as branch science. R&D in the ministries,
on the contrary, is directed by people who are not
scientists. "They themselves do not perform scien-
tific research, and many of them have only a vague
notion of how it is conducted. "7 To be sure, scien-
tific and managerial competence varies across minis-
terial lines. In the defense-related sectors, such
as the machine-tool and instrument-making, radio, and
electrical equipment industries, R&D management is
qualified, experienced, and forceful. It is much
less so in long neglected areas like light industry,
consumer goods, and local services. Here sometimes

179

the technical administrations and coordinating de-
partments of ministries lack specialists with any ad-
vanced scientific degrees. Some responsible staff
even lack a higher education. ° Nonetheless, many
branch R&D organizations display great timidity to-
ward their ministries . The studies they conduct are
often pro forma exercises that fail to expose defi-
ciencies in the development of the branch, much less
in the leadership of the ministry. 9

Generally speaking, the Soviet approach to struc-
turing and managing innovation has been premised on
an image of technology transfer that prevailed large-
ly in the West until the early 1960s. According to
this view, the transfer process is envisaged as "the
passage of disembodied 'ideas and methods,' endowed
with some quasi- independence in the manner of genes,
from one state of existence or milieu to another."
The underlying assumption is that technology is pri-
marily "an assemblage of pieces of information which
can be extracted or expelled from one sector of or-
ganized creativity and transposed to another to pro-
duce different outputs. "10 The whole process is re-
duced to clerical reporting, to a mechanical trans-
mission of documents and routing of information.

As has happened in the West, this perception of
technology transfer is being increasingly questioned
and replaced by a more dynamic and systems view. One
of the major Soviet discoveries about innovation in
the 1970s, in fact, was the importance of the "man-
agement connection." The very phrase "research-to-
production" cycle is said to be a misnomer because
action throughout must be negotiated and mediated.
It is better to speak in terms of a system of "re-
search-management-production," to use the words of
some Soviet analysts. Such phraseology, they note,
conveys a more adequate image of this complex pro-
cess. It also explicitly identifies and emphasizes
the management function and linkage. l With gradual
movement away from a strictly phase-dominant to a
more process view of innovation, the need for a sys-
tems model of organization and management has become
more and more apparent. Indeed, it is not too much
of an exaggeration to say that the Soviet research-

180

to-production cycle has been fundamentally unorgan-
ized and unmanaged. We return to this theme in chap-
ter 12 on current issues and trends in Soviet science
policy.

ORGANIZATION OF THE R&D CENTER

The criteria for organizing the R&D center reflect
the nature of its work and its status with respect to
production. The concentration on fundamental re-
search, applied research, design engineering, or de-
velopment determines the extent to which the center
is organized as a scientific discipline or a respond-
er to the needs of industry. This, in turn, deter-
mines the character of its staff and the complement
of its internal subdivisions. For example, an Acad-
emy institute tends to contain a relatively homoge-
neous complement of natural scientists conducting
"paper" research and drawing on laboratory services;
an industry development organization tends to contain
a relatively heterogeneous complement of engineers
and technicians conducting design, small-scale manu-
facture, and testing work and drawing on experimental
and pilot production facilities. Many organizations,
of course, encompass more than one stage of the R&D
process.

The relationship of the facility to production de-
termines the legal status of the facility. It may be
independent, with a technically oriented management
and maintaining a full complement of supply, sales,
and other functional departments to service its re-
quirements; or it may be formally incorporated with
production facilities. The internal status of the
R&D center is important because it determines largely
the degree of autonomy of the research function and
the relative priority of R&D vis-a-vis production.
If the R&D unit lacks legal and administrative inde-
pendence, it frequently is reduced to providing first
aid to industry. In Siberia, for example, only eight
percent of the research and engineering personnel of

181

R&D subdivisions at industrial establishments in the
early 1970s actually conducted scientific R&D. The
remainder were engaged in servicing the needs of pro-
duction or in making minor improvements in the tech-
nological base. 12

In the new associational forms linking research
with production, the status of the R&D center varies.
In a science-production association (NPO) , a research
institute or design bureau is ordinarily the lead or-
ganization, while in a production association a re-
search institute, design bureau, or general R&D de-
partment is generally subordinate to production man-
agement. In these new complexes and integrated struc-
tures, management must be concerned, in varying de-
grees, with both production and R&D, and functional
departments typically service performers of both ac-
tivities. Because these organizations are heavily
concerned with the application of results in produc-
tion and use, we consider them further in that con-
text later in this chapter.

Recently, Soviets have become more interested in
the organizational problems of R&D and production fa-
cilities. The drive to create an optimal system of
interrelationships between individuals and groups is
termed "scientific organization of labor," and it may
be recalled that a section of the S&T plan is devoted
to this subject. For the most part, this concern de-
volves into "time and motion" studies and analyses of
material flows on the shop floor, but there is also
mounting concern with organizational structure and
the management process. The Soviet regime has long
formulated standard organization tables for estab-
lishments by function and by size of labor force.
However, these have generally not been scientifically
substantiated and have been characterized by extreme
specialization of functions with emphasis on vertical
lines of command. The lack of organizational flexi-
bility has indeed been one important obstacle to in-
novation. Scientific work has been organized like
industrial activity. Little attention was given to
the optimal size and structure of personnel and oper-
ations. As a rule, leaders of R&D units have demand-

182

ed automatic increases in the number of scientific
workers and support staff. Only recently have they
become aware that expanding the size of the work
force may actually lead to a decline in productivity,
to a lengthening of the decision process, and to in-
creases in cost.-^ There has been a universal depre-
ciation of organizational and managerial factors in
research, development, and innovation in the USSR.
"Paradoxical as it may seem," a group of science ana-
lysts in Novosibirsk observed in 1971, "in our coun-
try science is probably the only sphere of human ac-
tivity for which economists, planners, supply person-
nel, etc. are not specially trained. For all these
persons there are not even special courses to retrain
them for working in scientific institutions or to im-
prove their qualifications."-*-5

Finally, the spatial distribution of R&D estab-
lishments is an issue. This decision has generally
been left to middle management organs, such as the
Academy presidium and ministry collegia. Important
considerations included historical precedent (e.g.,
an initial R&D base dating from the Tsarist era) ,
proximity to ministry main administrations, proximity
to educational facilities, proximity to the industri-
al facilities of the ministry, and the general ameni-
ties of the locale. As a consequence, Leningrad and
Moscow became science centers, but the benefits of
geographic colocation between facilities of several
hierarchies were realized only when the decisions of
their independent management bodies happened to co-
incide. Recently, however, the Soviets have come to
appreciate the value of the

'research complex1 as an innovation-promoting
organizational device. A research complex is
a cluster of research institutes specialized
in different fields and working closely with
neighboring enterprises. The variety of spe-
cializations facilitates the interdisciplinary
cooperation often required in applied work,
and the close association with neighboring in-
dustrial enterprises makes for greater ease in
prototype construction, testing, and innovation.

183

The most ambitious research complex is the
one that has grown up in the Academic City
of Novosibirsk, which is taking on some of
the characteristics of the research-based
industrial clusters around Boston, Palo
Alto, and Houston. 16

The Academic City at Novosibirsk incorporates predom-
inantly Academy facilities of different departments,
some of which have developed close ties with branch
design bureaus and pilot plant facilities. Science-
production centers are also planned to be built around
institutes of the Lithuanian Academy of Sciences in
chemistry, chemical technology, and the physics of
semi-conductors. Similarly, in Kurgan the recent for-
mation and expansion of facilities of four ministries
concerned with ground vehicles, including automotive,
agricultural, railroad, and construction equipment,
reflect this enhanced belief in industrial "cross
fertilization." Bureaucratic barriers, rooted in and
reinforced by the organizational and spatial separa-
tion of R&D performers, are increasingly recognized
as harmful.

The structure of the Soviet R&D establishment is
thus influenced first by the nature of the activity
in question. Beyond this, organizational structures
tend to permit little flexibility compared to Western
standards. Extreme specialization of activity and
vertical lines of command are the norm. Basically,
the research-to-production cycle has been broken up
in time, task, and territory. Recent developments of
particular interest are the closer organizational ties
between research and production in the "association"
unit and the development of research complexes char-
acterized by geographic collocation.

CONDUCT OF R&D

Execution of R&D plans depends on acceptable cri-
teria of fulfillment. While production targets may
be measured by tons, units, rubles, or other physical

184

and value indicators, there is no entirely satisfac-
tory measure of research or innovative output. This
is particularly true at the stages of fundamental
and applied research. For many years the measure
of inputs has been by default simultaneously the
measure of output. ■*■' In other words, if budgeted
expenditures in fact were spent, then the plan was
considered fulfilled. The number of projects has
also been used as a criterion, but this raises prob-
lems of project definition, determination of comple-
tion, and noncomparability between projects. With
narrowly applied research, design, and development
efforts have been made to measure success in terms
of technical coefficients or the ultimate economic
benefit of R&D results. These efforts are hampered
by imprecise statistics and conceptual measurement
problems.

Like their American colleagues, Soviet authorities
have yet to resolve this problem if, indeed, resolu-
tion is possible. The criterion of project comple-
tion seems generally to predominate, although not
much reliance is placed on it, especially in the pro-
duction establishment, where fulfillment of technical
plans generally is not a primary establishment suc-
cess indicator, although informal evaluation of tech-
nical performance is an important determinant of man-
agerial career paths. By whatever criterion employed,
plans relating to science and technology more often
than not have not been entirely fulfilled, with per-
centage completion figures often ranging from 50 to
90 percent.

Direct Control Mechanisms

Plan fulfillment is controlled in general in the
same way as plan formulation. Specifically, organs
responsible for administrative supervision of estab-
lishments monitor fulfillment of the entire estab-
lishment plan, while other management bodies monitor
fulfillment of important aspects or specific func-
tional areas of plans. For example, in line rela-
tionships the enterprise plan is monitored by the
ministry, and the ministry plan by Gosplan on behalf

185

of the Council of Ministers. State committees, in
turn, monitor execution of important tasks (e.g., the
GKNT) or a functional area of the establishment plan,
such as supply (Gossnab) . In addition, Gosbank has
an important role in overseeing the financial flows
which are planned to correspond to physical flows,
and the CPSU exercises a general oversight function.

Within the performing establishment, program con-
trol techniques incorporated in various plans facil-
itate conduct of the R&D project. We noted, for ex-
ample, that thematic plans of research institutes and
design bureaus are based on "calendar plans;" for-
mulated on a project basis, these subdivide the work
into stages, designate responsible individuals, and
schedule completion dates. Recently, a more formal
research management technique has been developed:
"network planning and control." In broad terms, a
network model is any construct which is "dynamic,
informational, and reflective of the process of per-
forming a complex of tasks directed to the achieve-
ment of a single goal."-'-" In practice, this can mean
little more than such tools as grid schedules and
Gantt charts for diagramming activities in sequence
and for monitoring time, cost, and quality parame-
ters. However, it also includes Soviet development
and application in the early 1960s of more sophisti-
cated techniques which resemble PERT and critical
path methods. 1^

In the mid-1970s, network methods are said to have
gotten their "second wind," according to Dr. Yu. I.
Maksimov. Three factors have stimulated this recent
growth: (1) the introduction of management informa-
tion systems that provide the necessary information,
norms, and technology for their application; (2) in-
creased utilization of multistage econometric models
linking the stages of planning, design, and produc-
tion; and (3) the development of analytical aids and
computer programs for calculating and optimizing not
only specific network charts but also alternative
stochastic network models. Examples of more sophis-
ticated network techniques along the lines of CPM
and PERT that surfaced in the 1970s for complex in-

186

terbranch projects are the so-called "Sputnik" and
"Skalar" systems. In addition to evaluating time
and cost elements, network methods are also improv-
ing handling of materials and technical supplies and
allocating manpower in R&D organizations. On the
whole, however, their application remains limited;
they are still largely confined to the major scien-
tific centers, notably Moscow, Leningrad, Kiev, and
Novosibirsk, and to major large-scale projects. 20
Such planning and control techniques, it may be no-
ted, are compatible with the Soviet predilection for
structured, planned activities. Their development
and application to date have been constrained, in
large part, by structural factors and the organiza-
tional-managerial fragmentation of the innovation
cycle.

Other features of program control in the Soviet
performer establishment center on the creation of the
optimal internal organizational structure for support
of R&D. As previously indicated, much interest has
been expressed in the development of "organic" links
between R&D and production, the topic of the next
section. But even within the independent R&D estab-
lishment, Soviet authorities have found it advanta-
geous to associate and link R&D personnel responsible
for distinct stages or aspects of a complex project.
Two pertinent dimensions may be identified: associa-
tion between individuals working on separate stages
of product or process development, and association
between individuals working at the same stage of, re-
spectively, product and process development. The
benefits of such close contacts are said to have been
instrumental in developing the ceramic tile manufac-
turing process. 21 Accordingly, numerous research in-
stitutes and design bureaus are expanding direct forms
of cooperation and collaboration among the various
participants in the research-to-production cycle.

In addition, some performer establishments have
begun to experiment with forms of project management
and matrix organization to break down intrainstitu-
tional barriers, departmental and functional, and to

187

accelerate the innovation process. A discussion of
the pressures generating the conversion to matrix
management is found in chapter 12. The deficiencies
and limitations of traditional hierarchical forms of
administration are thus being increasingly felt, and
efforts are underway to develop new and more dynamic
structural designs to cope with the problems of ad-
vancing technology and complexity.

As regards methods of conflict resolution the ex-
perience of modernizing production operations at ZIL
is instructive. Whenever delays or deviations in
program development arose, a meeting was convened of
representatives from ZIL, organizations participating
in the project, local organs, and pertinent minis-
tries. Problems were settled through joint agree-
ments of the interested parties with the formulation
of the appropriate protocol. Any conflicts between
organizations subordinate to the Ministry of the Au-
tomobile Industry which they could not settle them-
selves were resolved by the leadership of the min- ,
istry. The solution was binding for both sides. If
disagreements arose between organizations of differ-
ent ministries, the matter was examined by the appro-
priate ministerial authorities. Sometimes a joint
decision by the interested ministries resolved the
issue. Disagreements over questions of planning were
examined by Gosplan, supply problems were handled by
Gossnab, and S&T problems were mediated by the GKNT.22

The formality and rigidity of these procedures to
resolve conflict prevent rapid application of correc-
tive measures. Such procedures also breed conserva-
tism in the performer at the time of plan formulation
and, in a sense, frustrate central control by insula-
ting the performer with layers of paper and delays.23

Conflicts are inevitable in any project. Coordi-
nation is the process of managing conflict. Conflict
management practices keep different units together as
they work toward integrated goals. In the Soviet
Union organizational separation and administrative
fragmentation of the innovation process complicate
greatly the task of coordination and necessitate cum-

188

bersome mechanisms for settling disputes and forcing
decisions. The considerable time spent in negotia-
tion and getting approvals indicates, in fact, a lack
of effective coordinating bodies and conflict-resolv-
ing practices, especially at the interfaces of agen-
cies where management is critical to assure continu-
ous action.

Indirect Control Mechanisms and Incentive Systems

In addition to direct, administrative control mech-
anisms, Soviet authorities are beginning to apply in-
direct techniques to structure the environment and
influence the decision rules of the performer estab-
lishment so that the manager or researcher supports
innovation. Many of these mechanisms are in fact
formal inactive programs while others concern pro-
grams which facilitate supply, sales, technology
transfer, and other activities, all of which increase
managerial flexibility and effectiveness. In this
part, we briefly comment on several indirect mecha-
nisms of particular importance in R&D program control.
Mechanisms which predominantly concern the production
establishment are left until the discussion of utili-
ization of results, even though they may impact on
the conduct of R&D in such organizations.

An adequate supply of personnel, material inputs,
and capital equipment is of course a prerequisite for
any R&D program. The Ministry of Higher and Special-
ized Secondary Education forecasts future labor re-
quirements (by profession and skill) of science and
of the economy in concert with Gosplan, the GKNT, and
the Academy of Sciences. In accord with planned man-
power needs, students are induced to follow certain
career paths with stipends and the standard attrac-
tions of employment following graduation. Given the
tremendous expansion in the number of scientists and
engineers over the past two decades, the quantity and
quality of S&T personnel have generally not slowed
down R&D. While salary ranges are fixed for certain
categories of employees, R&D facilities effectively
bid for workers in a manner similar to competition
for labor in the United States. Appropriate alloca-

189

tion of personnel, then, generally is assured, with
one major exception. Maximum salary levels are fixed
in relation to the nature of the organization at
which the scientist or engineer is employed. Accord-
ingly, the best S&T personnel have tended to gravi-
tate away from industry to the Academy system, and
within industry from production to R&D establishments.
This doubtless has hindered industrial R&D and asso-
ciated production assimilation, although in recent
years the relative position of industry seems to have
imp roved s omewha t .

At the same time, certain deficiencies of the sys-
tem of planning and training scientific manpower mer-
it brief mention. Surpluses of specialists exist in
some, more traditional fields of science and technol-
ogy and shortages in other areas, such as computers,
biochemistry, and microelectronics — the main paceset-
ters of modern S&T progress. Experts in the modern
social sciences and management sciences are also
lacking. The orientation of planning and profession-
al training has not kept pace with changes in science,
technology, and organization. "Existing programs of
education are not designed to train specialists in
the subjects needed by modern society and by research,
planning, and design organizations," observes Gvishi-
ani.24 The acceleration of technical progress also
makes obsolete information, knowledge, and acquired
skills, so that the retraining of scientific, engin-
eering, and managerial personnel is becoming increas-
ingly necessary. This need is all the more pressing
in view of the mounting constraints on manpower re-
sources which require greater attention to qualita-
tive improvements rather to quantitative increases in
the size of the S&T establishment.

Acquisition of material supplies, another control
mechanism, generally is planned at the same time that
basic R&D and production assignments are formulated.
Gossnab is the principal agency in charge of planning
and distribution of supply. The Soviet material and
technical supply system is conducive to large-scale
deliveries of fairly standardized products, but not
to the typical small-lot deliveries of special pur-

190

pose items required for R&D. Only recently have spe-
cial science supply organizations been set up, but
these still operate only on a small-scale, limited
basis. As already indicated, many deficiencies exist
in the supply system which add uncertainty and risk
to all innovation efforts. Finally, access to sup-
plies of capital equipment for experimental purposes
is handled either by Gossnab, for small-scale acqui-
sitions, or by Gosstroy when new construction or ma-
jor reconstruction of facilities is needed. Tradi-
tionally, Soviet authorities have chosen to minimize
investment in an experimental base and scientific in-
struments industry in favor of investment in on-line
production facilities. While an extensive campaign
is now underway to correct deficiencies in experimen-
tal and pilot plant establishments, the Soviet pat-
tern in certain sectors is still deficient by Western
standards.

The Soviet patent system also affects R&D. Soviet
policy concerning inventions and discoveries and as-
sociated patents and author's certificates is admin-
istered by the State Committee for Inventions and
Discoveries in concert with legal authorities. Patent
departments now generally exist in ministries, re-
search institutes, and production organizations to
service the inventor.

In contrast to the American system, proprietary
rights over inventions in the USSR are held by the
state. Rather than permit the inventor to retain a
monopoly use of the invention for a designated period
and thus retard diffusion, the Soviets have chosen to
compensate the inventor with a lump sum payment . Re-
muneration is paid if the invention is used not only
in the USSR but also abroad in the sale of licenses,
in documentation transmitted to other countries by
way of economic and S&T collaboration, or in instal-
lations built by the USSR abroad as part of its for-
eign technical assistance programs. The maximum
award for a single invention cannot exceed 20,000 ru-
bles, however. Discoveries are also rewarded with a
one-time payment in the amount of 5000 rubles. Cash
awards are also given for rationalization proposals

191

which result in efficiency improvements, and may vary
from 10 rubles to 5000 rubles.25

This discussion of inventions and associated com-
pensation serves as an introduction to the Soviet in-
centive system, perhaps the most important of all the
indirect control mechanisms. It is certainly one of
the most complex. Figure 11-1 illustrates those ele-
ments of the system concerned only with material in-
centives, in both the independent R&D organization
and the production establishment. Incentives are
channeled through wage manipulation and bonus funds;
of the latter there are general funds of the organi-
zation and funds associated with special activities.
There are also collective and individual bonuses.
Throughout all these programs, however, the economic
theme predominates; whenever possible, remunerations
are predicated on the economic savings produced by
the contributions. 26

At independent R&D organizations, incentives tend
to be associated more frequently with the activities
of individual scientists or groups of scientists rath-
er than the overall results of the organization. Cer-
tainly this approach derives from the tendency of re-
searchers to be project-oriented and from the diffi-
culty of evaluating aggregate performance of the in-
stitute or design bureau. Material incentive pro-
grams which benefit personnel at independent R&D es-
tablishments include prizes for especially noteworthy
scientific research and development. At the national
level these are Lenin and State Prizes. These prizes
are awarded annually for the most outstanding achieve-
ments. State prizes are also awarded in science and
technology by the republics of the USSR. In recent
years the Central Committee of the All-Union Young
Communist League has given "Young Komsomol Prizes" to
young scientists for especially outstanding S&T ac-
complishments .

In addition, creators of the best displays at the
Exhibition of Achievements of the National Economy
are presented gold, silver, and bronze medals and
certificates each year. For areas of technology war-
ranting special attention, a highly flexible system

192

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of special awards has been set up. Thus, 100 bonuses
have been established for the solution of the most
important problems in chemistry (25,000 to 150,000
rubles) ; 15 bonuses for putting into production new
models of tractors, agricultural and land reclamation
machines, etc. 27 Finally, in each independent R&D
organization, a bonus fund is provided for the "suc-
cessful solution of scientific problems." The size
of the fund is equal to 2-3 percent of the establish-
ment's total wage fund, and is allotted by the man-
agement of the establishment for high quality work,
for projects completed on or ahead of schedule, and
for R&D results that find practical application. Man-
agement also may tie a portion of the fund to espe-
cially important projects. 2°

While monetary incentive programs are important
economic levers, Soviet authorities also put consid-
erable stock in "moral" incentives, which include a
wide range of prizes, awards, commendations, medals,
and special titles. Of course, several material in-
centive programs, particularly the prizes, carry with
them important public and professional recognition
and commendation. Individuals who are actively en-
gaged in S&T developments are awarded honorary ti-
tles, such as "meritorious inventor" and "meritori-
ous efficiency expert," and they are given some priv-
ileges in getting apartments, vacations and travel,
etc. Individuals who distinguish themselves in some
special way earn the prestigious title of "Hero of
Socialist Labor." S&T achievements may also be pre-
requisites for promotion of specialists and bestowing
of scientific degrees and titles. It is equally ap-
parent that moral incentives have an indirect, al-
though possibly belated, material incentive content.

Each of these elements of the incentive programs
for R&D personnel is more or less independent of the
ultimate application or use of R&D results. Intro-
duction or utilization of results is stipulated as an
important reason for bonuses under each of the incen-
tive mechanisms, but it is generally not an absolute
requirement .

194

Finally, there is one incentive program that mer-
its special mention because it aims at stimulating
the interests of researchers, design engineers, and
producers alike in the entire research-to-production
cycle, in the economic aplication of R&D, and in the
reliability and performance of new technology. The
source of this program is the Fund for the Creation
and Introduction of New Technology. At industrial
plants, this fund is generated through deductions
from the cost of production amounting to 0.2 to 1
percent of the wage funds of industrial production
personnel. At research institutes and design bureaus
these funds are specially provided for in their bud-
gets and range from 4 to 10 percent of the annual
wage fund. Enterprises retain 25 to 50 percent and
R&D facilities retain up to 50 percent of these funds
and divert the rest into centralized incentive funds
at their respective ministries which are used to re-
ward work on especially massive and important pro-
jects. 9

The size of bonus awards depends on the annual
economic savings due to technological innovation and
is determined on the basis of the scale presented in
Table 11-1. Staff members of research institutes and
design bureaus can claim 30 to 50 percent of the bo-
nus, technology developers 20 to 35 percent, and pro-
duction workers 25 to 40 percent. Ninety percent of
the incentive funds should be used to reward those
who directly participate in the work and 10 percent
should go to those who assist in innovation and util-
ization. For completion of projects ahead of time,
the size of the bonus is increased by 25 percent.

Interesting features of this system are (1) the
association of rewards with results regardless of the
organizational affiliation of the participants, (2)
the flexibility intended by the centralization of a
large share of the fund, (3) the rigid and somewhat
arbitrary character of the shares of bonuses as a
function of the stage of R&D, and (4) the reliance on
the ubiquitous measure of "economic return." The un-
reliability of this measure, the decline in the bonus
share with rising benefits, and misapplication of

195

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funds have diminished the effectiveness of this pro-
gram. Yet there is potential in this and other pro-
grams to redirect the attention of scientists and
engineers to economic application, which is perhaps
the major theme of all current developments in Soviet
program management and control mechanisms regulating
the conduct of R&D.

UTILIZATION OF R&D RESULTS

The growing Soviet concern, reflected throughout
this study, for effective application of R&D results
in production and use is a consequence of two trends:
(1) the rising dependence of continuing Soviet eco-
nomic growth on technological innovation; and (2) re-
latively poor Soviet performance in translating sci-
entific ideas into new products and processes. The
first necessitates improved performance in the entire
R&D sector. The second focuses on the greatest prob-
lem within that sector. As General Secretary Brezh-
nev phrased the issue in 1971, "If one examines all
the links of the complex chain uniting science with
production, it is not too difficult to see that the
links connected with the practical realization of
scientific achievements and their adoption in mass
production are the weakest. "31

The overriding reason for this deficiency is the
absence, under traditional Soviet operating practices,
of individuals and organizations that are both capa-
ble of and interested in effecting the transition to
application. In principle, the independent research,
design, and development organizations are obligated
to supply the production establishment with technical
documentation, working blueprints, and/or prototypes
of new products and processes ostensibly ready for
utilization. But the effective judge of the "readi-
ness" of an innovation is the designer or developer
himself, and he has little incentive to undertake
gratuitously activities which will only help the pro-
ducer. The latter, in turn, receives little or no

197

credit for doing design or development work that
should already have been completed satisfactorily,
and he recognizes that demonstrating culpability is
most difficult. Innovation to the factory is almost
always a nuisance. It frequently involves substan-
tial redevelopment, if not wholesale scrapping of
received results and starting anew. In various sec-
tors of machine building more than half of the plan
tasks for the assimilation of new technology are in-
complete due to deficiencies and errors at the re-
search, development, and design stages. 32

To facilitate the transition, Soviet authorities
have recently taken several reform measures. These
may be grouped into plan-related, organizational,
and financial measures.

Plan-Related Developments

The fundamental means of accounting for introduc-
tion of R&D results, as we have seen, is specifica-
tion of all pertinent variables in the plan of the
R&D organization. Scheduled completion dates and ex-
pected manufacturing establishments are required, in
principle, to be designated in R&D project plans.
Difficulties in making these assignments effective,
however, include the problem of forecasting results
accurately at the initiation of R&D work and of elic-
iting the cooperation of the manufacturing enterprise,
In addition, it is unclear whether the manufacturer
subsequently is obligated to accept the innovation,
and the nonbinding character of many R&D plan tasks
combined with the difficulty of determining culpabil-
ity tend to vitiate the potency of plan stipulation.
Most important, however, mere stipulation does little
to alleviate the underlying causes contributing to
reluctance to innovate . And Soviet managers have
proven to be adept at modifying plans "from below"
and frustrating the real intent of central authori-
ties when their interests are threatened.

Other plan-related developments involve an exten-
sion of the systems approach to include the utiliza-
tion stage. This may involve little more than devel-

198

oping network models and grid schedules to include
steps related to application, but even this extension
can force consideration of the entire research-to-
production cycle as an integral unit. With clear de-
lineation of responsibility, culpability for failure
is easier to fix. Network approaches also require
careful scheduling and provide a framework for ac-
commodating unanticipated developments. All of these
elements reduce project uncertainty and risk and ben-
efit considerably the production establishment, which
must function in an environment hostile to "slack"
and uncertainty.

An interesting policy development is the creation
of standard "systems" for regulating activities. The
State Committee for Standards is responsible for de-
veloping methodologies for technical norms, standards,
and quality certification programs, and for oversee-
ing application of such methodologies. Such functions
are of course essential in any industrial economy, but
particularly so in the Soviet Union where the absence
of an effective market mechanism means that the state
must ensure that common design, development, and pro-
duction practices are utilized where such commonality
is advantageous. This is particularly useful in
avoiding unnecessary duplication of effort in design.

In recent years, Gosstandart has developed certain
families of procedures to ensure that standards for-
mulated in a decentralized manner will be comparable
and transferable throughout the economy. The first
such system was the Unified System of Design Documen-
tation (YESKO) , intended to unify design approaches.
Other unified systems since developed include those
for standardizing data processing techniques (YESSTEM) ,
classification and coding (YESKK) , computer languages
(YESPD) , and procedures for evaluating product qual-
ity (YESKAP) . The most ambitious system is the Uni-
fied System for Technological Preparation for Produc-
tion (YESTPP) , directly aimed at the problem of in-
troducing R&D results. It incorporates elements of
the other special systems and in total contains 3500
state standards on all phases of the preparation of
new products and processes, including design, devel-

199

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202

opment engineering, testing, and introduction as well
as the associated process, equipment, and tooling re-
quirements.

An example of the YESTPP system as envisioned for
the automobile industry is depicted in Figure 11-2.
Subsumed under each activity are instructions regula-
ting its conduct. As may be seen, the system is par-
ticularly advantageous in permitting parallel work on
separate design and development stages. This is es-
pecially important in the mass production of a com-
plex product where the development of process tech-
nology may be extensive and time consuming. Numerous
Soviet statements indicate that YESTPP and other sys-
tems approaches have reduced significantly the lead
time required for innovation.

In general, these efforts seek to alter the tradi-
tional perspectives and motivational bases of Soviet
design engineers and developers of new technology.
Designers have tended to use heavy metals and rein-
forced concrete articles that are expensive because
they are profitable for those creating new devices
and erecting new installations since they are evalua-
ted in terms of the cost of structures and models. In
addition, designers of new technology are also paid
more if their blueprints are "original" and require
nonstandard equipment. Thus, it has not been advan-
tageous for design organizations to include in their
drawings and models standard parts and components for
this reduces the cost of designs and subsequently
their bonuses. It is these practices and procedures
that account for the great volume of unique and small
batch production in the USSR, especially in machine-
building and instrument -making. 33

Organizational Developments

Organizational measures designed to facilitate the
implementation of R&D results include manipulation of
the internal make-up of the basic operating units and
the creation of entirely new types of organizations.
These measures are premised on the plausible belief
that applied R&D personnel and facilities will better
serve the interests of production if they are brought

203

into closer association with, if not formally incor-
porated into, establishments for which production is
a primary mission.

In this context, we discuss production associa-
tions (POs) and science-production associations
(NPOs) . These new complexes represent an attempt to
build unified organizational systems rather than un-
related or disjointed arrays of tasks, functions, and
individual efforts. Such integrated structures are
designed to give institutional expression and coher-
ence to the innovation process. Some science policy
experts in Moscow argue, in fact, that only through
research and development complexes can the "research
to production" cycle be effectively carried out from
beginning to end. 34 The move to create special or-
ganizations concerned with applications engineering
and diffusion is less well advanced, and only brief
attention is given to them.

As noted previously, the Soviet enterprise typi-
cally corresponds to a single-plant Western company
with extremely limited design, development, and ex-
perimental capabilities. The production association,
combining formerly independent R&D and production
units, is fast becoming the basic economic organiza-
tion of Soviet industry. A major aim of establish-
ing POs is to insure that series or mass production
of the most advanced items is set up for the internal
market and for export. The POs are comprised of tech-
nologically integrated production enterprises with re-
search institutes and design bureaus attached to them.
For example, the Leningrad instrument manufacturing
production association Svetlana has experimental re-
search and design divisions that work closely with
its production facilities in developing new hardware
models, a special design bureau for creating technol-
ogical equipment for their industrial testing, and
shops for manufacturing this equipment. The organi-
zational structure of this association is depicted in
Figure 11-3. Note the experimental design bureaus
(OKBs) which are subordinate to two of the associa-
tion's plants. The presence of a comprehensive ex-
perimental research facility is characteristic of POs
especially in machine building, and the metallurgical,

204

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205

chemical, and oil refining industries. A number of
large POs even have research centers of all-union im-
portance, such as the R&D service of the KAMAZ, and
the scientific research and experimental design cen-
ter of Elektrosila, which occupies a leading position
in the world in turbine construction.^-*

A distinguishing characteristic of the PO is the
clear emphasis on production at large-scale, effi-
cient rates of output. A production facility, in
fact, is the lead unit. Thus, while improved innova-
tive performance is an important objective, other
standard economic benefits of such larger units also
are expected. These include economies of large scale
production, specialization of subordinate units, and
wider application of advanced managerial practices.
The use of integrated planning techniques, computer-
ized data processing systems, and organizational de-
signs based on principles of purely project or matrix
management has allegedly been instrumental in accel-
erating innovation in these new structures. Accord-
ing to Ivanov, the research-to-production cycle has
been reduced for certain products by 50 to 75 percent
in the Uralelektrotyazhmash Production Association.
In the L'vov Instrument Manufacturing PO imeni V. I.
Lenin this cycle was cut on an average by 50 percent,
and the degree of interchangeability of assemblies
was boosted to 80 percent while their weight was re-
duced by half and their reliability was raised by a
factor of 3 or 4. In the Svetlana and Elektrosila
production associations almost all development pro-
jects reach the production stage.

The most significant organizational development,
from "the long range view of scientific and technical
progress," is the creation of science-production as-
sociations. ' Set up in the late 1960s explicitly
to organize innovation as a distinct and major task,
NPOs function as special nurseries for the rapid gen-
eration and application of new technology. Though
they exist in nearly all branches of industry, they
are concentrated mainly in machine building, espe-
cially in the electrotechnical, electronics, instru-
ment manufacture, and aviation sectors, as well as in
the chemical and petrochemical industries.

206

Within industry, three basic types of NPO may be
differentiated according to their final product: (1)
those that specialize in developing primarily new
products and technological equipment for their manu-
facture; (2) those that concentrate on creating new
means of mechanization and automation of production,
including management information systems; and (3)
those that engage in the development of new materi-
als and technological processes. The third type is
less prevalent than the other two associations. A few
NPOs, like Mikrobioprom (microbiological industry),
Soiuznauchp litprom (wood processing) , and Plastpoli-
mer (chemical industry) , engage simultaneously in de-
veloping new products, new processes, and new kinds
of equipment and automated devices.

NPOs differ also in terms of the scope of their
specialization and product use. The majority are of
branch importance. However, some NPOs like Plastpol-
imer are primarily subbranch while still others are
essentially interbranch. The latter include Soiuzna-
uchplitprom and Soiuzsteklomash (glass machine build-
ing) , which develop articles used in construction,
electronics, and defense as well as in the automobile,
electrical engineering, instrument manufacture, light,
food, chemical, and medical industries. Similarly,
the Ail-Union NPO Soiuztranspr ogress was formed in
1974 to design, develop, and install transport con-
tainer systems throughout the country. 39

Numerous benefits are ascribed to these new inte-
grated and integrating structures. The process of
creating and applying new technology has been reduced
in many NPOs by two and even three times. The qual-
ity of research, development, and innovation is also
higher. In the electrical engineering industry the
share of output stamped with the seal of highest qual-
ity is 1.5 to 2.5 times greater in the NPOs than in
the branch as a whole. *■*■ In the associations from 40
to 50 percent (and climbing to 80 and 90 percent) of
completed R&D is actually introduced while in autono-
mous scientific and technological organizations only
15 percent is successfully utilized. Labor and ma-
terial costs are also reduced because of less dupli-

207

cation, greater specialization, better organization
of design work, fewer documentation errors, greater
standardization of parts, and more extensive automa-
tion of work processes. In addition, NPOs are cred-
ited with harmonizing the actions, goals, and inter-
ests of different performers and with creating a more
favorable climate for innovation. They enjoy greater
possibilities of applying network planning methods
and computer techniques to the innovation cycle, of
using matrix organization and project management to
improve the decision process and to build more dynam-
ic and flexible structures. Above all, they are said
to generate favorable conditions for the conduct of
uniform policies and integrated leadership throughout
the associations.^

As Berliner notes, however, much of the evidence
on NPOs deals with the performance of individual or
groups of associations. Aggregate data in systematic
form are still lacking. 43 Nonetheless, there is
sufficient fragmentary information and critical anal-
ysis to suggest a mixed record of performance and di-
verse development. Not all associations have been
resounding successes. Even those NPOs that have been
held up as stellar examples, like Pozitron and Plast-
polimer, have important problems. Despite individual
accomplishments and some remarkable gains, deficien-
cies persist in both the theory and practice of sci-
ence-production associations.

One area of criticism and controversy concerns the
optimal structure and composition of NPOs. Basically
at issue are conflicting views about the essential
purpose and function of the NPO. There is general
consensus that in promoting the rapid creation and
smooth transfer of technology the associations are to
encompass the entire research-to-production cycle.
The precise role and form of participation of the NPO
in the initial and concluding phases of the cycle are
debatable, however. There are two main schools of
thought. One holds that the task of the association
should be limited essentially to the development and
testing of prototypes. According to this view, the
business of series and mass production of new tech-
nology belongs not to the NPO but to the production

208

associations and enterprises. If these two tasks are
not delimited organizationally between science-pro-
duction and production associations but are done with-
in the NPO, then confusion and a distortion of func-
tions takes place. The inclusion of enterprises en-
gaged in series production leads to an expansion of
manufacturing operations to the detriment of scientif-
ic R&D activity. The main function of the NPO — proto-
type development — becomes subordinate to the task of
fulfilling current production programs.

Indeed the claims and fears of those adopting this
view are confirmed by experience. In several NPOs
the share of scientific research and experimental de-
sign comprises only 5 to 15 percent of the volume of
industrial production activity. Some of these NPOs
have, in fact, been subsequently renamed POs. In oth-
ers, R&D results are accumulating and cannot find an
outlet either at the association or at other enter-
prises of the branch. The share of new products orig-
inating in the NPO and assimilated into series produc-
tion has also declined in recent years at Elektroap-
parat and Kondensator . More than half of the work of
series production facilities at some NPOs deals with
assignments that have nothing to do with the activi-
ties of their own R&D units and sometimes even fall
outside the specialized profiles of the associations.
NPOs having major enterprises of series and mass pro-
duction have shown a strong tendency to become inter-
ested mainly in improving production indicators and
not in accelerating innovation. To weaken the desire
to maintain production runs of the same items and to
encourage greater product mix and renewal, a new rule
has recently been introduced. If an NPO issues a par-
ticular product more than three years, deductions to
its incentive funds are then reduced by 50 percent. ^

On the other hand, many specialists insist equal-
ly strongly that series or batch production jls_ an in-
tegral part of the NPO. The role of series produc-
tion facilities is not to increase industrial output
but to serve as an arena within which the NPO can
test and perfect its innovations under actual produc-
tion conditions. If NPOs lack series production ca-
pability, this forces them to transfer the assimila-

209

tion of new products and processes to other organi-
zations. That prolongs the process and reduces the
quality of innovation. In effect, the NPO is exclud-
ed from the most important stage connected with the
introduction of R&D results into the economy and can-
not perform its role of connecting link between sci-
ence and industry. When the NPO concentrates mainly
on "preproduction" work, it cannot really qualify as
a "science-production" association.^

Views also differ concerning the place of the NPO
at the research end of the innovation process. For
that matter, there is no agreement in the Soviet Union
about the place and role of basic research more gen-
erally in the research-to-production cycle. ^ Until
recently, major NPOs like Pozitron themselves per-
formed fundamental research equal to nearly 10 per-
cent of their total scientific research effort. It
became necessary to abandon this practice by the mid
1970s, however. While a few NPOs still engage in
some exploratory research, the majority contract with
institutes of the Academy of Sciences to conduct fun-
damental research for them. ' Befitting their role
and development as "branch" institutions, NPOs focus
predominantly on applied R&D.

At the same time, the scope and volume of scien-
tific research and development vary widely among NPOs.
In some associations the share of R&D may be less than
10 percent of the total cost of production activity
while in others it may account for as much as 50 per-
cent. ^8 Some Soviet specialists believe that a fixed
percentage should be established for the ratio of
"science" and "production" activity as a mandatory
condition for the functioning of an NPO. Though he
disagrees with this view, Taksir notes that when a
complex is headed by a small research institute which
conducts an insignificant volume of R&D (less than
10-12 percent) , then the NPO is generally unable to
direct effectively the research-to-production cycle.
Arkhangelskiy also demonstrates that the capacity of
the R&D center must be nearly 20 percent of the pro-
duction capacity for an NPO to perform successfully
its various functions. ^

210

This aspect acquires special importance because
the NPO is intended to serve as the S&T center for
the branch or subbranch in its specialty. In fact,
this is seen as a distinguishing feature of the NPO,
differentiating it from a production association and
other research and production complexes which may
also contain R&D units. As branch S&T centers, NPOs
are assigned several important tasks: long-range
planning of the main directions of research; devel-
oping forecasts and programs to solve basic S&T prob-
lems in the branch, especially those related to im-
proving production efficiency and product quality;
and making recommendations about the use of R&D re-
sults in both the branch and the economy as a whole.
NPOs are expected to coordinate scientific research,
experimental design, and engineering work done by
other organizations and production associations, re-
gardless of the departmental subordination of these
units. In addition, they perform other branchwide
services, such as supplying S&T information, doing
economic analysis and engineering feasibility stud-
ies, col -toting work on patents and licensing, set-
ting branchwide technical standards, forecasting the
demand for new products and processes, and providing
management training and advice on production organi-
zation with respect to new technology. The associa-
tions are also expected to develop and provide spe-
cial services for introducing new technology, its as-
sembly, start-up, and adjustment at other enterprises
and organizations.-^ In providing these functions,
the NPO clearly assumes (or shares) certain of the
responsibilities formerly held by the ministry tech-
nical administration and other staff agencies.

To be sure, several NPOs do perform these tasks
and act as the principal organizers of technical prog-
ress in their branches. Soiuznauchplitprom plays this
role in the woodprocessing industry. One hundred and
five enterprises of the USSR Ministry of Timber and
Wood Processing Industry and 67 enterprises of other
ministries produce items developed by the NPO. Mikro-
bioprom is the S&T headquarters for the microbiologi-
cal industry. More than 70 enterprises work on pro-
jects originating at the association. Plastpolimer

211

is the leading center for plastics and has overall
responsibility for high pressure polyethelenes, poly-
styrenes, f luoro-plastics, and polyvinylacetates . Be-
tween 1969 and 1973 the NPO introduced 117 innovations
into Soviet industry. In the cryogenic engineering
industry nearly 90 percent of all machinery and equip-
ment produced is based on designs developed at the in-
dustry' s NPO Kriogenmash. In radio electronics Pozi-
tron is the S&T center. 51

At the same time, it is also clear that not all
NPOs serve as S&T centers for their branches. Some
associations serve only a few enterprises and contain
very small R&D units. Others that do exercise branch-
wide functions do not provide all the special services
mentioned above. Some NPOs are unable to perform
broad S&T tasks either because they lack a research
institute or the one they have is not the leading link
in the association.-^

These basic differences in perception and practice
determine the structure of science-production asso-
ciations. Table 11-2 shows the structural makeup of
15 leading NPOs. All these associations contain both
a scientific research institute and a series produc-
tion unit. Thirteen have an experimental production
capability. Other evidence suggests, however, a less
uniform picture for the NPOs as a whole. In a study
of 40 NPOs, Kushlin notes that 10 percent had no se-
ries production unit while 8 percent lacked a scien-
tific research subdivision. Eighteen or 45 percent of
the NPOs had no experimental production or testing fa-
cility .53

Particularly absent, it seems, are facilities such
as start-up and adaptation organizations and training
centers which can promote more rapidly and effective-
ly the utilization of R&D results. A few NPOs, like
Pishchepr omav t oma t ika (food processing) , Soiuznauch-
plitprom, and Impuls (computers) , have established
special services that help introduce new products and
processes directly at client enterprises and train
their personnel in the use and repair of equipment.
At series plants of their branches other associations

212

TABLE 10-2

STRUCTURAL MAKEUP OF SCIENCE-PRODUCTION ASSOCIATIONS

Nana of Che N?0

Subdivisions included in the Association

3

3
*J

u

■

e

■»*

*h .3
■•* o
*i u
3 3

y 3

f* 3
•j «)

03 =S

3
3
<U

u

3

a

3
3

a

Oca lgn- Techno logical
bureau

o

■H
U
3
N

3
20
W

O
u

3

3

—1
O

u

Experimental
Production Plant

Scrlea Production
Facility

3
U

u S S
MOO

• J u
>» 3 3

■2 — — «
= 33

■J -i 3

n n so

3 3-

<: m a

A Training und
Methods Center

Agropribor

SoiuCTanchylic?roa
Sikh ax
Siscema
Istochni3t

Mikxobioprcm
Soiuzscakloraaah
Znanria Truda*
Plascpoliaer

?o2icrott

Pishchepromavto-

aatika

Soiozavtomats Crom
Turan

J.

+
+

+
+
■fc

+
+
+

+
+
+

+

+

+

4>

+

+
+

+

+
+

+

-r
J.

+

+

+
+

+
+
a.

+
+
+

+
+

+
+

+

+
+

■i

+

* The head unit of the NPO is the Central Design Bu-
reau for Construction Engineering which is essen-
a scientific research institute

Source: K. I. Taksir, Nauchno-proizvodstvennyye obedi-
neniya (Moscow, 1977), p. 34.

213

have created special departments (affiliate services
of the NPO) which include design engineers and tech-
nologists who assist the plants in retooling and man-
ufacturing new products. 54 In general, though, this
set of important functions is not yet being performed
by the majority of NPOs.

Underlying these issues of the optimal structure,
composition, and functions of the science-production
association is the problem of what in American busi-
ness terminology is called "product differentiation."
Given the array of new structural designs and asso-
ciational forms that have evolved since the late 1960s,
the NPO has had difficulty in gaining and maintaining
a distinct identity. Lacking a precise definition of
the NPO, some ministries have arbitrarily classified
the new complexes. What are labeled NPOs are, in fact,
production associations or complex scientific insti-
tutions. Some NPOs have experienced problems in pre-
serving their fundamental dual character. Overdevel-
opment of their scientific functions turns the NPO
into a traditional research institute, only larger.
Hypertrophy of production operations, on the other
hand, transforms the complex into a production asso-
ciation. The difficulties of maintaining a "dialec-
tical unity" of functions have led some experts to
press for a fixed ratio or at least minimum levels
regulating these activities. "

The problem of product differentiation is made all
the more difficult because in some instances it is
practically impossible to distinguish between an NPO
and a PO which contains its own large R&D complex.
For example, the Uralmash Production Association in-
cludes a scientific research and engineering design
institute of heavy machine-building which has more
than 6000 workers and does business by contract with
more than 60 R&D establishments in the country. Dur-
ing the Ninth Plan the PO developed more than 100
prototypes of new machines and equipment. 56 The dis-
tinction becomes especially fine when a production
association creates new products in small series or
single lots and is one of the major producers of this
type of product, as with Elektrosila.

214

On another level, the relations of science-produc-
tion associations with higher ministerial authorities
are not uniform and regularized. In some branches
there is no permanent body to lead NPOs . Where such
organs exist they sometimes fail to take into account
the distinct features of individual associations and
regard them all as alike. Some ministries and agen-
cies approach NPOs as ordinary research institutes or
industrial enterprises. The lines of subordination
also vary. A few NPOs, such as Soiuznauchplitprom
and Mikrobioprom, report directly to the ministry (fre-
quently to a deputy minister). The majority, however,
operate on a three-link system (NPO — glavk/industrial
association — ministry) . They report either to one of
the glavki or main administrations in their respec-
tive ministry or to an all-union industrial associa-
tion. Plastpolimer provides an example of the latter
pattern, which will probably become more common as
the ministries reorganize and the glavki are liquida-
ted or transformed into industrial associations. The
majority of NPOs function as the first link of manage-
ment. Yet a number of them conduct from 30 to 100
percent of all R&D done in the branch. In addition
some NPOs are essentially all-union associations.
These differences are not reflected in their legal
status, however. This causes some specialists to ar-
gue that certain NPOs should have additional powers
and prerogatives compared to other NP0s.->°

Internal organizational development has also been
marked by problems and diversity. The key issue has
been the degree of legal authority to be exercised by
the central management or head organization as against
that retained by the constituent units. "The criter-
ia for establishing a happy median between loose or
formal merger and over centralization of decision ma-
king are apparently difficult to arrive at," observes
Nolting.5° The aim of creating these new complexes,
it will be recalled, is to break down structural frag-
mentation, to bring the multiple participants in inno-
vation into closer association and even under common
administration.

Meanwhile, the evolution of NPOs up to 1976 shows
two negative tendencies. On the one hand, integra-

215

tion stopped far short of the goal of a unified and
organic system. Amounting to little more than a me-
chanical conglomerate of autonomous units, the NPO
was transformed into "an administrative superstruc-
ture, a superficial link on the path from the minis-
try and glavk to science and production. "60 Even
among the earliest and most tauted NPOs institutional
consolidation was slow and incomplete. An investiga-
tion of nine major NPOs of this kind by the Academy's
Institute of Economics in 1974 found that a council
of directors had not yet been formed in three of the
complexes. One still lacked a scientific-technical
council for the association. 61

On the other hand, centralization was sometimes
carried to an extreme. Constituent units of an NPO
were denied any autonomy, even in operational manage-
ment and control. This situation proved especially
debilitating when the association contained subdivi-
sions that were highly diverse and geographically
dispersed. As a result the NPO became unmanageable.
The decision process became frozen as each unit was
forced to go to the highest levels and much time was
lost in getting agreements and approvals. In short,
association members became caught in the familiar bu-
reaucratic chain from which they were supposedly to
be liberated.

Of these two tendencies, the first was the most
dominant. The retention of autonomy by components
almost everywhere impeded, if not prevented, the de-
velopment of an integrated planning and management
structure for the association as a whole. Pressure
subsequently mounted on Moscow authorities to impose
greater centralization. Significantly, the official
statute on the NPO, which was finally approved by the
Council of Ministers on December 30, 1975, stipulates
that all units joining an NPO are denied any legal
autonomy. At the same time, the ministries and re-
public officials have been given some discretion in
applying this ruling and making exceptions .62 intra-
associational relations are likely to continue to re-
flect substantial diversity in practice, if not in
form. How successful the 1975 statute will be in
overcoming formal merger without leading at the same

216

time to excessive centralization still remains to be
seen. Writing in the Academy's main economic jour-
nal a year after passage of the statute, two Soviet
science experts admit, "While some services are cen-
tralized, a system has still not been found of organ-
izing the mutual relations of structural units and
the machinery of management for the complex as a
whole. "63 indeed until 1976 NPOs were not even reg-
istered as an independent institutional category at
the USSR Central Statistical Administration. All ac-
counting was done strictly in terms of their individ-
ual structural components. 6^

Underlying these problems of the continuing frag-
mentation of planning, financing, and management of
NPOs are serious and unresolved methodological issues.
New integrated performance criteria have not yet been
devised. This explains partly, in fact, why minis-
tries and higher planning and financial agencies per-
sist in issuing plans and funds to separate NPO sub-
divisions. Many performance indicators still relate
to the activities of R&D and production units in
their previously independent status. Existing indi-
cators do not differentiate between R&D subdivisions
that belong to NPOs and those that do not. According
to current methods of accounting and reporting, it is
not possible to aggregate the activity of organiza-
tions that relate to material production and to the
world of nonproduction.6->

To be sure, some efforts are being made in this di-
rection. Some norms have been devised for determining
the average length of the research-to-production cycle
and are used in measuring the performance of some NPOs ,
According to Tabachnikas and Skliar, however, these
norms are established rather arbitrarily, largely "by
eye." No fixed and uniform methodology exists yet
for this purpose. In other associations indicators
are used to determine the degree to which the research-
to-production process has been reduced over time. Tak-
sir points out, however, this kind of norm is of dubi-
ous value because reduction of the innovation cycle
obviously has a limit. 66 What methodological progress
has been made in developing integrated evaluative in-

217

dicators and norms for NPOs is still largely experi-
mental. Not everyone realizes yet that the NPO is
not simply the sum of its parts but represents a
qualitatively new type of organization.

Looking back on the first decade of its life, then,
we can say that this new institutional form has still
not found its proper place in the Soviet scheme. Very
few NPOs have approached — much less achieved — the
goal of creating an organizationally, technological-
ly, and economically integrated system for promoting
innovation. In most, "science" and "production" con-
tinue to lead separate lives. The administrative
barriers between them have not been effectively bro-
ken down. Organization-building has been marked by
much confusion and diversity, not to mention bureau-
cratic opposition and lethargy. In the absence of
clear guidelines from the center, branch ministries
created NPOs as they saw fit, often obliterating the
boundaries between different kinds of research and
production complexes. Sometimes NPOs were put to-
gether without any systematic research and analysis
of design and development problems. Little consid-
eration was given to their place in the context of
future directions and needs of the branch as a whole.67
Initially, the lack of a formal statute permitted
needed flexibility and experimentation. It also re-
duced the danger of putting these new structures in-
to an organizational strait jacket and monolithic mold.
More and more, however, the absence of a document es-
tablishing the legal status of the NPO and defining
its basic functions and principles of organization
had prevented the solution of a number of complex
problems. The associations were recognized as being
frozen in their units, forms, and relations. A new
stage of development came in 1976. After confirma-
tion of the NPO statute, Kremlin authorities stepped
up efforts to impose greater clarity, order, and di-
rection in the affairs of the associations. The ef-
fect of these measures remains to be seen. Taken to-
gether they form part of a broader drive to make the
Tenth Plan a period of "development not only in
breadth but also in depth" for research and produc-
tion complexes of all kinds, and not just NPOs. As
for the latter specifically, they are expected to grow
to 200 to 250 by 1980. 68

218

At the same time, expectations for the NPOs seem
to have cooled. Much of the initial optimism that
surrounded them has dissipated. As one Soviet observ-
er noted in the summer of 1976, "One can hardly find
now defenders for the view that every branch insti-
tute should be turned into an NPO. The opinion is
growing slowly but steadily that the number of NPOs
in industry cannot be big, perhaps three or four in
one ministry." "And if this is so," he continued,
"then it is necessary to recognize directly that the
NPO is a partial solution to the problem of strength-
ening the ties between science and production.""" V.
G. Shteingauz also concludes, "The NPO must be re-
garded as a successful but far from the only form of
integrating research with production. "70 The NPO is
still expected to play an important — and even increas-
ing— role in accelerating innovation and technical
progress, but other integrating structures will have
to be developed.

In this light, the growing Soviet interest in es-
tablishing specialized introduction organizations
whose task is explicitly the implementation and dif-
fusion of new technology and production techniques
merits brief discussion. Since this function is not
the main job of either scientific or production or-
ganizations, a new type of institution is needed for
this purpose that is neither a research institute nor
an industrial enterprise, some specialists argue.
They see innovation — the exploitation and application
of new ideas and designs — as a distinct activity that
is fundamentally different from both research and
production. Hence, they maintain that new technology
transfer vehicles are required to perform vital but
neglected innovation functions. Such specialized or-
ganizations are depicted as the new connecting links
between science and industry which serve as important
"middlemen" facilitating and mediating the research-
to-production process. 71

Attention to these new structural forms has grown
in part because the science-production associations
have proven to be more successful at creating new
technology than at applying it. While a few NPOs
conduct extensive innovation activities, they are the

219

exception rather than the rule. The majority of as-
sociations lack the services and staff needed to per-
form these functions on any meaningful scale. NPOs
have other limitations as well that prevent them from
acting as significant forces for the mass introduc-
tion and diffusion of R&D results. The creation of
NPOs strengthens the production ties of only a few
research institutes. It does nothing for other branch
R&D units that do not belong to the NPOs. They remain
as isolated and insulated as before. Moreover, even
the most specialized enterprise cannot be satisfied
with the services of only one scientific organization
to solve all the problems of its technological devel-
opment. Since NPOs generally produce new items at
best in small batches of a 100 or so, their volume of
output is clearly insufficient for the needs of the
branch as a whole. In addition, the NPOs are obliged
to implement their own R&D. Their experimental pro-
duction capacity is usually too small to handle S&T
results produced by outside organizations. In short,
the NPOs are closed and relatively confined complexes,
walled off from many R&D organizations and production
establishments in their branches. What is needed are
organizations specializing exclusively in translating
R&D into practical use. They must be distinguished
by their universality and capability of introducing
ideas generated by many sources; they must be places
where any R&D unit or industrial plant can turn for
assistance. '2

Actually, the idea of innovation firms is not new.
Taksir describes five kinds of organizations that
have evolved since the late 1960s and are oriented
specifically to the utilization of new technology .73
One type includes institutions like Energotekhprom
within the USSR Ministry of Power and Electrifica-
tion that are fully geared to develop and transfer
R&D results into application. Established in 1965,
this experimental production and engineering facility
provides a broad array of innovation services in the
amount of more than 14 million rubles a year. Besides
installing and debugging new products and processes,
Energotekhprom trains personnel at client enterprises
The firm also helps scientific institutes formulate

220

their research agendas to incorporate specific re-
quests from industry.

A second type of adaptation-diffusion organization
is of a more mixed profile. Along with introducing
new technology, it also engages in repair and con-
struction work. Examples include several associa-
tions that have been set up by the USSR Ministry of
Non Ferrous Metallurgy. Enterprises in this branch
are generally not able to conduct technological mo-
dernization and improvements on their own. Some of
these "introducing" associations have a specific en-
gineering specialty; Uralenergotsvetmet , for example,
installs evaporative cooling equipment for metallur-
gical plants, pneumatic transport systems for loose
and pulverized materials, and special pneumatic dust
collecting devices. Economic savings from innova-
tions by this one association alone are estimated to
have been about 30 million rubles for the period 1971
to 1975.

Soiuztekhosnastika represents the third variety of
introduction organization. This association deals
mainly in the installation of different interbranch
engineering devices. One of its chief tasks is the
creation and broad dissemination of a uniform system
of standardized multipurpose assembly and readjusta-
ble equipment. Soiuztekhosnastika contains several
regional divisions that service plants in Moscow,
Novosibirsk, Kiev, and other major industrial cities.

A fourth group of innovation organizations is made
up of the Centers for Scientific Organization of La-
bor at various research institutes. Conducting all
their work through economic contracts, these centers
resemble, to a certain extent, management consulting
firms in the West. They serve essentially as organ-
izational intermediaries between R&D establishments
and the world of production. Their business involves
not only the introduction and diffusion of new tech-
nology but also the propagation of knowledge and mo-
dern production experience. The Center for Scientific
Organization of Labor and Production Management under
the All-Union Institute of Economics and Labor Organ-
ization in the oil and gas industry falls into this
classification.

221

From a Western perspective, the fifth category of
innovation organization identified by Taksir is per-
haps the most interesting. This group is comprised
of what can best be described as profit maximizing
engineering or management consultant firms. They are
created and sustained through the private initiative
of technological entrepreneurs seeking to exploit S&T
advances. Offering a broad profile of services, these
organizations exist essentially outside the formal
economic system and beyond official planning and con-
trol. Paradoxically, this is both their greatest
strength and their greatest weakness. In accord with
the initial decentralizing spirit of the 1965 econom-
ic reform, more than a dozen of these new technical
firms sprung up across the USSR. They included, for
example, Fakel (The Torch) in Novosibirsk, Novator
(Innovator) in Baku, Iskra (The Spark) in Tomsk, Po-
isk (Search) in Severodonetsk, and Temp (Tempo) in
Moscow. By the early 1970s, however, most of them
were forced to close their doors. Others continue to
lead a semi-legal life. In general, these institu-
tions have not been stable and surviving additions
to the Soviet S&T establishment. This is not because
they have been inefficient but, on the contrary, be-
cause their success and viability have not been ac-
ceptable in ideological and political terms.

Indicative of the nature and fate of these entre-
preneurial ventures is the "tale of the Torch. "7^
Fakel was set up by a few young scientists-entrepre-
neurs in 1966. It had no budget, no material sup-
plies, no paid staff, and no office space. After
compiling a list of prospective consultants and their
specialties, the founders simply set up headquarters
in a dormitory of the University of Novosibirsk and
began soliciting contracts. Consultants would be se-
lected to work on problems in their spare time. Var-
ious organizations were paid for the use of their
equipment and facilities during non-working hours.
The Torch received 3.5 million rubles from 263 con-
tracts for the period up to June 1970. Allegedly,
the innovations introduced by it resulted in a sav-
ings of 35 million rubles. These included the devel-
opment of an optimal plan for forest exploitation in

222

Novosibirsk Province, a system of computer analysis
of seismic materials for a local geographical expedi-
tion, and an experimental model of a Torch-built
swamp vehicle for oil exploration in Western Siberia.
Other projects were in such fields as gold extraction,
the use of manure, and the development of control de-
vices for the Novosibirsk Power Station. Despite
support from the Presidium of the Siberian Division
of the Academy of Sciences, not to mention the local
Komsomol authorities under whose wing Fakel formally
operated, however, this efficient but unconventional
organization came under strong attack and eventually
closed down in May 1971. '^

One of the few firms of this kind to have survived
(in modified form) is Novator . Formed in 1967 and re-
organized by leaders of the Azerbaidzhan Republic in
1971, it has since been put under dual subordination
to the Azerbaidzhan Ministry of Local Economy and the
State Committee on Inventions and Discoveries. Basi-
cally, the firms seeks and screens relatively simple
"orphaned inventions" from institutes throughout the
USSR that cannot exploit them. By 1976 Novator was
doing an annual business of over a million rubles.
Since its creation the firm has developed and dissem-
inated more than 120 innovations. Some of these have
been awarded state medals, and others have been dis-
played at the Leipzig international trade fair.'"

Scientists in particular attempt recurrently to
revitalize and legitimize these entrepreneurial firms.
Recently in the Academy's main economic journal Tak-
sir and M. Krasnokutskiy argued that these institu-
tions were viable and desirable. They urged that
these products of private initiative be turned into
state organizations with a firm legal basis.'' The
central issue is the institutionalization, if not bu-
reaucratization, of entrepreneurship . The problem is
how to preserve these efficient innovating forms with-
out destroying their spontaneity, independence, and
elan vital — the very foundation of their success.
Some Soviet specialists recognize that entrepreneur-
ship is frequently associated with specific and spe-
cial personality traits. Like R. M. Shteinbok, they

223

reason then, "If there are people, there can be or-
ganizations as well. "78 The fundamental and prob-
lematical elements involved in institutionalizing
the innovative spirit are not fully appreciated or
addressed.

In general, all five types of introduction organ-
izations are severely limited in their capacity for
introducing innovations. There are very few of them.
Their legal status remains ill-defined. No formal
statute establishes their goals and functions, rights
and responsibilities, organizational and administra-
tive relations. Their activity is not properly stim-
ulated, planned, or monitored. 79

Though there has been renewed interest recently in
expanding and developing this net of organizations,
Soviet opinion remains hotly divided. Some commenta-
tors feel that structures specializing exclusively in
innovation have a "right to exist." Given the con-
straints on existing research and production units,
many recognize that new instrumentalities can be use-
ful. Others stress that innovation is the proper
function of production units. What is needed is a
more favorable climate for innovation at plants. In-
deed, the formation of special introduction bodies
carries the possible danger that they, like R&D units
in the past and even still today, will become organi-
zationally separate from the production sector. As a
result, a set of superficial links may be created.
Innovation functions themselves may become distorted
and exaggerated. The vital interface problems that
plague the research-to-production process today would
not only persist but be compounded by still another
set of administrative barriers. As one observer ex-
plains, "Until the economy itself begins to work ful-
ly for the introduction of new technology, no organi-
zational structures by themselves will guarantee suc-
cess."80 While there is growing awareness that new
approaches and perhaps even radical restructuring are
needed to provide the stimuli and the opportunities
for innovation, there is no clear consensus about what
shape these solutions should take.

224

Financial Developments

In the operating environment of the production es-
tablishment, implementation of R&D results is only
one of many necessary activities. Because implemen-
tation tends to divert physical and financial resour-
ces from primary production, and because establish-
ment plans are almost universally ambitious and gen-
erally do not include innovation as a primary success
indicator, innovation must compete directly with al-
ternative activities. The terms of the competition
are increasingly financial. Primary establishment
success indicators now are profitability, growth in
sales volume, and, to a lesser extent, measures of
input productivity and the quality mix of output.
Fulfillment and over fulfillment of these target indi-
cators lead to substantial financial bonuses and, less
formally, managerial careers.

In general, primary production activities have
outrun innovation activities. First, the disruption
in normal operations that accompanies the assimilation
of new products and processes has not been accounted
for, in part because of inadequate preparation at ear-
lier stages of the R&D process. This threatens out-
put and corresponding sales targets. Second, assim-
ilation expenses associated with readying the product
for series or mass production are often unanticipated
and reduce establishment profitability. For new prod-
ucts in particular, the actual input requirements or
costs tend to exceed the planned or projected level.
Because prices are generally set administratively in
relation to planned cost, sales and profitability
performance is lowered, often for years. Ivanov ob-
serves that the returns on putting new technological
hardware into operation are on the average 55 percent
lower than on continued production of old items. °1 As
a consequence, plan fulfillment is threatened and per-
formance frequently falls below levels which might
have been achieved in the absence of innovation.

To remedy the situation, programs have been devel-
oped to accomplish three tasks: (1) compensation for
increased costs incurred by the enterprise during the

225

period of retooling and start-up production of new
technology; (2) reimbursement of the collectives of
the enterprises for losses to the incentive fund due
to reduced profitability during the period of assim-
ilation of new products and processes; and (3) re-
wards for workers at enterprises, assembly and ad-
justment organizations, and other technology transfer
facilities for the development and adoption of new
technology ,°2 while special financing arrangements
have been instituted to achieve the first task, a
combination of special incentive programs and alter-
ation in the basic conditions and evaluative crite-
ria influencing motivation have been developed to ad-
dress the other two. Brief attention is given to
several of these programs .

When the producer does face high start-up costs,
the superior administrative organ is required to
stipulate in the plan adequate sources to cover these
costs. ** First, for "one-off" or very small lot pro-
duction, expenses may be covered in the price of the
product. Second, although increasingly rare, the es-
tablishment may receive budget grants comparable to
budget grants for R&D projects of especially high
priority. The GKNT may be expected to have an impor-
tant role in administering such grants. A third
source is the Fund for the Assimilation of New Tech-
nology or the New Products Fund, formed by ministries
on the basis of a deduction from total cost of pro-
duct ion. OH Part of this Fund is held by the minis-
try for application where needs are the greatest. A
fourth source is the Fund for the Development of Pro-
duction, formed at industrial establishments on the
basis of their performance. It is used mainly for
modernization, automation, and the introduction of
new products. Improvements in the performance of the
enterprise which lead to better labor productivity,
cost reduction, improved quality, and a higher rate
of profit can also be financed from this Fund. The
bulk of the Fund is used to purchase capital equip-
ment and does not form part of R&D expenditure. It
does, however, ipso facto promote the process of in-
novation. The Fund for the Development of Production
is formed from three sources: deductions from enter-

226

prise profits; 30 to 50 percent of amortization al-
lowances used for the replacement of capital and dif-
ferentiated by branches of industry; and receipts
from sales by the enterprise of unused and superflu-
ous equipment."-5

Finally, the introduction of new technology and
renovation of plants may be financed through bank
loans. Such loans are made available for a period
of up to six years under the condition that the costs
will be recouped within the indicated time. 86 in gen-
eral, the New Products Fund, Development Fund, and
bank credit account for a large and increasing share
of the overall compensation for start-up expenses.
However, complaints are frequently voiced in the So-
viet press about the administration of each of these
programs, and a general consensus seems to prevail
that all justifiable if unanticipated start-up costs
still are not adequately covered.

When any enterprise "auxiliary" activity, such as
innovation, tends to impact adversely on primary in-
dicators of establishment performance, Soviet author-
ities have often tried to counter this effect with a
special incentive program. By doing this, they admit
implicitly that parameters such as prices, which in-
directly influence the size of basic bonuses, do not
reflect accurately the true social benefits of the
activity. For example, a new product which initially
earns losses may signal a problem in the pricing sys-
tem rather than an inherently uneconomical product.
Rather than address the complex, interrelated factors
at the root of the problem, authorities add special
programs sequentially as a somewhat crude attempt to
compensate for these deficiencies.

Approximately 30 such programs, several of which
impact on new technology, are currently in operation.
The most important of these, the Fund for the Creation
and Introduction of New Technology, has already been
described. Other examples are special incentives for
the export of Soviet technology abroad and for putting
foreign technology into operation. When technology
is exported, the Ministry of Foreign Trade allots to

227

science and industry 80 percent of the licenses in
foreign currency. Of this amount 30 percent is put
at the disposal of the branch ministry (agency) and
50 percent is given to the enterprise (or scientific
research institute) . These funds can be freely used
outside the current state import plan to purchase
foreign technology and equipment as well as to ac-
quire technical literature and to finance business
trips of experts abroad.0'

In most cases, (1) a portion of the funds is held
by the superior management organ; (2) the size of the
fund and its distribution are determined according to
formulas, whenever possible related to economic re-
turn; and (3) conscious efforts are made to reward
only those who actually participate in the introduc-
tion of the innovation. The last point has caused
dissension. While innovation can be remunerative for
the participant, because of the special programs, it
can reduce or eliminate the bonuses of the nonpartic-
ipant by adversely affecting primary establishment
success indicators. Overall, for the establishment
manager, Berliner has demonstrated under plausible
assumptions that special incentive programs in gener-
al will not compensate for the decline in primary bo-
nuses associated with innovation."8 And should inno-
vation threaten plan fulfillment, resistance to inno-
vation will be extreme.

In recent years, Soviet authorities increasingly
have chosen to attack the problem directly by addres-
sing those factors which influence the formation and
disbursement of the primary bonus fund. An important
factor in formation of the fund is economic substan-
tiation of the parameters which are used to measure
performance and, optimally, to guide decision makers.
Of these, price formation methodology has drawn the
most interest.

Industrial wholesale prices in the Soviet Union
are set administratively and left unchanged for vary-
ing periods. This facilitates planning and evalua-
tion across periods, but in any case continuous ad-
justment is administratively impossible. Yet to
function as a signal to decision makers, prices also

228

must reflect "socially necessary expenditures of pro-
duction." With new product innovation, the problem
with the traditional system is as simple as it is se-
vere. As cumulative output increases, cost declines
for a host of reasons which collectively may be la-
belled "learning curve effects." While market compe-
tition acts to force corresponding declines in prices,
fixed prices will yield larger profits as the product
becomes increasingly dated.

Formulating price-setting methodology and monitor-
ing its application are the responsibility of the
State Committee for Prices. Fairly recently, the Com-
mittee has begun to implement measures for introducing
at least step-wise or staged price flexibility. The
essence of the new techniques is described by Ivanov:

One of the rules of price formation is that the
savings obtained by an innovating enterprise
should not exceed 50 percent of the total eco-
nomic gains. Prices on new articles may change
with time, assuring the producer fast write-off
of initial start-up costs as well as reasonable
profitability of production at all stages of the
'market cycle1 of the innovation.

Specifically, prices for items which make only
minor improvements or changes in existing prod-
ducts are established in conformity with the
price level of their prototypes with adjustments
made for the savings effected by the product im-
provements. Prices for radically new items are
established in stages. First, temporary prices
are fixed which include planned cost of produc-
tion of the new article plus a profit margin
that is based on the norm of profitability of
the enterprise for a given year for its basic
output. However, it should not exceed 20 percent
or be less than 10 percent of the planned cost
of production. After the expiration date of tem-
porary prices (when the initial costs for new
production have been written off) , permanent
wholesale prices are established for new prod-
ucts. In case of high quality products which

229

have been awarded the State 'Seal of Quality,"
prices may include a special incentive markup
amounting to 0.5 to 1.0 percent of the prof-
itability norm, but under the condition that
this does not increase the producer's share
of economic returns by more than 50 percent.
This markup is established for a period of 3
years and can be lifted if the article does
not meet high quality standards during the
next certification.

In turn, permanent wholesale prices on new
products may be fixed for a limited period
of time and in stages. Such differentiation
has the goal of imparting to price formation
additional effectiveness as a weapon for re-
moving from the market obsolete products, as
well as preserving the fair distribution of
economic gains produced by the application
of new technology between the producer and
the consumer as the cost of production de-
creases. Step-like, sequentially lowered
prices are therefore established for prod-
ucts whose costs are particularly elastic in
relation to the volume of the series which
saturates the internal market to a high de-
gree and also for products with high rates
of obsolescence. °9

Important elements of this description are the at-
tempt to tie product prices to a measure of quality
and the intent to divide the "benefits" or economic
returns on a new product between the producer and the
consumer, thereby rendering the product advantageous
to both. This benefit is transmitted through the ef-
fect of higher prices on establishment success indi-
cators and, hence, on the primary bonus fund. And,
finally, the step-wise character of pricing is in-
tended to promote product turnover. Imparting price
flexibility by administrative means is costly and
cumbersome, but promises benefits.

Other recent efforts relate the size of primary
bonus funds to technological advance and the evalua-

230

tion of measures of labor productivity and product
quality to primary success indicators. Encouraging
growth in labor productivity is designed to induce
the establishment to seek out process innovations.
Greater emphasis on product quality indicators is in-
tended to promote product innovation. Again both
these measures depend on administrative evaluation
procedures. Ivanov describes the system as follows:

Fulfilling plans for the introduction of new
technology at enterprises has a direct effect
on the financial indicators of their economic
activity, and in particular on the generation
of incentive funds and funds for social-cul-
tural and housing programs. This link is real-
ized by means of periodic certification of prod-
ucts manufactured by plants. The results of
this certification are used to adjust the base
standards for forming these funds. During the
Ninth Five Year Plan, for example, enterprises
which set for themselves higher targets than
those of the plan were permitted to increase
their allocations to the incentive funds by 2
to 9 percent for each one percent increase in
the production of high quality output, calcu-
lated on the basis of its total output. Also
if the output of high quality products exceeded
the norms of the plan, they could increase the
allocations by 1 to 4 percent depending upon
the share of this production to total output.
Conversely, incentive allocations were reduced
by 3 to 10 percent for each one percent decrease
of high quality production as compared with
planned targets. In addition, for each one
percent increase in the volume of low quality
output above the permitted norm, these alloca-
tions were cut by 1 to 10 percent depending on
the share of low quality production in the total
output .90

Such procedures are also costly to administer but al-
legedly have worked.

Finally, Soviet authorities have introduced a pro-
vision which stipulates that a portion of the primary

231

bonus fund is to be used for lump sum payments to in-
dividuals or collectives as a reward for particularly
noteworthy achievements. Innovation is prominent on
the list of such achievements. We do not know the
extent to which such payments are actually made to
reward innovation activity, but they do offer the po-
tential of a flexible and effective stimulus, at least
from the perspective of the recipient. However, the
caveat applicable to the Fund for the Creation and
Introduction of New Technology is also pertinent here.
A lump sum payment may make the participant better
off, but if the innovation should cause the entire
bonus fund to shrink, the labor force as a whole will
suffer. Indeed, the motivating effect of all these
special incentives for innovation is limited. The
statutory ceilings on individual bonus earnings are
such that no person may receive an excess of 90 to
110 percent of his base salary in bonuses of all
kinds. The relative balance of risk and reward as-
sociated with innovation, Berliner concludes, still
tends to motivate Soviet decision makers and managers
to discriminate against innovation in favor of alter-
natives that involve no change in products or proces-
ses.

In sum, throughout this section we have described
briefly (and incompletely) elements of Soviet plan-
ning, managerial, and financial policy which influ-
ence the degree and rate of new technology utiliza-
tion. While noting that the system must in fact be
formulated and set in operation as an integral unit,
we have been forced to analyze each unit separately.
Yet, for traditional practice, this approach does not
severely distort reality, since the stages of R&D,
the participants, and the various policy makers all
tend to be disjointed. However, we note in passing
that experiments are underway in certain ministries
to "unify" not only the stages of R&D but also the
entire policy-making process. The system, depicted
schematically in Figure 11-4, originated in the elec-
trical engineering industry. Planning is to be "con-
tinuous," accounting for all stages of the innovation
process. Similarly, financing originates in a Uni-
fied Fund for the Development of Science and Technol-

232

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233

ogy, again accounting for all stages. Within this
system planning, finance, management, incentives, and
other elements are to be closely integrated. This sys-
tem does represent a radical departure from tradition-
al practice and has been successful, though it has
been slow to diffuse. The pattern and impact of its
broadening application in Soviet industry should be
followed carefully.

EVALUATION OF R&D RESULTS AND PERFORMERS

The basic notion of comprehensive planning of R&D
and economic activities implies the ability to prede-
termine results in some detail. Thus, in the plan-
ning process, a set of evaluative criteria, the tar-
gets themselves, are generated and in fact are used
in assessment at designated plan deadlines. Because
the resulting performance rewards, such as the size
of bonus funds, sometimes are planned, it may even
be said that evaluation itself to some extent is pre-
determined.

Of course, the accuracy of this characterization
increases as the precision and detail of planning in-
crease, which occurs as R&D approaches the production
assimilation stage. Thus, for design, development,
and production establishments formal evaluative cri-
teria are utilized which, whenever possible, incorpo-
rate quantitative measures. Indicators employed in
plan formulation (volume of work, number of projects
completed) and project selection (economic return,
technical measures, social criteria) are also used in
evaluating the establishment. Though calculations of
actual or realized economic return are, in principle,
to be made following the application of R&D results
in production or use, they are in practice rarely
computed or recorded. Decisions regarding evaluation
and incentives are taken predominantly on the basis
of planned or projected estimates of return, not on
real results and savings.

234

The fact that individual compensation to some ex-
tent is tied to plan and project measures implies
that evaluation of employees and participants pro-
ceeds in similar fashion. Of course, subjective
judgment always enters into personnel evaluation,
but attempts are made to maximize reliance on ob-
jective criteria. Performance in meeting quantita-
tive plan targets affects not only income but also
careers of production managers, for example, and
thus is held to be an indicator of general managerial
capability.

As planning becomes less precise and detailed in
applied and fundamental research, there is a commen-
surate increase in reliance on subjective evaluation.
In practice, a mix of objective and subjective crite-
ria is employed to take into account the originality
and long-range promise of R&D, its economic and so-
cial usefulness, etc. ^ At the same time, the pro-
cedure for performance evaluation tends naturally to
be internalized in research facilities, as the re-
searcher's professional colleagues may be the only
group qualified to judge performance. Still, though,
the formality and hierarchical procedures character-
istic of most Soviet bureaucracies are also present
in the research evaluation process . The results of
the evaluation, in turn, are an important input in
the decision to continue, modify, or terminate pro-
jects which extend beyond standard plan periods. Rec-
ommendations of consultative organs and expert groups
are transmitted up the hierarchy to respective GKNT,
Academy, and Ministry authorities for official deter-
mination of future establishment and project direc-

92
tions. 7A

Relatively little information is available concern-
ing performance evaluation criteria and procedures for
individual scientists. Presumably, they differ across
facilities. We briefly describe below the example of
the evaluation system developed and used at the Sci-
entific Research Institute of Physical Chemistry imeni
L. Ya. Karpov.93 The Karpov system, as it has come to
be known, is gradually being adopted in other Soviet
research facilities.

235

Salary at the Karpov Institute depends on academic
degree attained, length of service, and results of
work. To evaluate the last element, a "certifica-
tion" commission convenes which includes leading sci-
entists and representatives of management and social
organizations. The commission evaluates employees
not less than once every three years. A 10 point ra-
ting system is used, and the following criteria are
employed to evaluate the individual:

1. Professional qualifications

2. Diligence at work

3. Prospects for further activity

4. Originality of research

5. Theoretical level of research

6. Experimental level of research

7. Value of research for theory

8. Value of work for practice

9. Ability to work independently

10. Ability to organize work for subordinates

11. Participation in work of technology utilization

12. Participation in social activities

13. Direct participation in experiment work^4

The commission makes two kinds of recommendations as a
result of its assessment: (1) maintain or modify job
tasks; and (2) increase or decrease salary or keep it
at the present level. The results of the evaluation
are approved by the learned council of the institute.
The decision of the council is final. 95

236

In general, Soviet procedures for evaluating R&D
results and performers tend to be formal and highly
structured. The work of both individuals and insti-
tutions is evaluated primarily in terms of their for-
mal fulfillment of thematic and financial plans, not
on the basis of the real value of their S&T achieve-
ments. There is a strong tendency therefore to pro-
pose "safe" and relatively minor themes, whose param-
eters are fairly well known and results more certain.
As Academician Ya. Kolotyrkin comments, "An institute
can fulfill its subject and financial plans year af-
ter year without contributing anything to technical
progress. "9"

Recently efforts to tie R&D planning and resource
allocation, management and incentive programs to end
results — the ultimate application of technology in
new products and processes — have mounted. Throughout
this study we have mentioned the increasingly ubiqui-
tous though still ambiguous measure of "economic re-
turn or effectiveness." If the utilization of R&D
was almost ignored in science policy in the past, then
since the late 1960s it has come to have almost exag-
gerated emphasis. There are important limitations,
however, on the utility of practical application as a
criterion for evaluating R&D results and performers.
Some science specialists contend that R&D organiza-
tions should not be evaluated in terms of the final
stages of the innovation process in which they still
have little direct participation, much less control.
Furthermore, the evaluation of results and real re-
turns must be long range because of the necessarily
protracted process of moving results from the lab in-
to use. Hence, the operational character of evalua-
tion is lost, and its motivating role is diminished.9'
As 0. I. Volkov notes, scientific R&D organizations
cannot be evaluated by the same criteria as production
establishments. They require an independent system of
indicators, instruments, and special organization of
management which, though closely linked with the eco-
nomy, possesses at the same time necessary autonomy.98
Science has its own internal development needs which
must be attended to, besides its external relations
and linkages with production.

237

DIFFUSION OF R&D RESULTS

In the Soviet economy, under traditional organiza-
tional and operating principles, diffusion of new
technology should not differ markedly from innovation.
That is, the first introduction and subsequent intro-
duction are not so sharply distinguished in the USSR
as in the West. Part of the reason for this is organ-
izational. When branch institutes or design bureaus
are independent, they are meant to serve impartially
all production facilities in the branch, and proprie-
tary rights over innovations are not associated with
the first introduction or use. Innovation may be in-
troduced simultaneously or sequentially in facilities,
with little advantage accruing to the first user.

The absence of competitive pressures in the Soviet
economy also means that the economic viability of the
noninnovator is not automatically threatened by its
failure to act. The production facility in the USSR
is responsible to its administrative superiors. For
the most part the facility is competing not against
other facilities but instead against its own perfor-
mance in previous periods. Because targets tend to
be set in relation to earlier own-facility results,
and because of conditions of general excess demand,
facilities of widely differing productivity levels
and innovative postures can coexist in the Soviet eco-
nomy for indefinite periods.

Today these situations are changing somewhat, in
part because of a conscious desire of the Soviet lead-
ship to encourage more rapid technology diffusion. Or-
ganizationally, the affiliation of R&D and production
establishments, as in the science-production associa-
tion, tends to distinguish an innovation from a dif-
fusion process. Innovation may be thought of as oc-
curring when the NPO plant successfully introduces
the technology, while the NPO leaves the problem of
diffusion to other branch plants. Similarly, to gen-
erate pressure for more rapid process innovation, So-
viet authorities are attempting to rely as much as
possible on branch-wide performance criteria for tar-
get formulation. Of course, branch standards have al-

238

ways been the ideal, and the process is slowed by the
fact that inefficient plants are not placed in a se-
verely disadvantageous position. Yet the greater ac-
cent now placed on branch-wide performance compari-
sons may ultimately have a favorable impact on tech-
nology diffusion.

In large part, however, the factors outlined pre-
viously which influence technology delivery and uti-
lization by the first producer similarly influence
succeeding adopters. Plans may stipulate introduc-
tion and in general are the basic coordinating and
motivating mechanism for diffusion. Organizational
and financial mechanisms may be employed to create
a favorable disposition toward innovation in all po-
tential adopters. The impact of clearly superior
economic performance is exemplified by the experi-
ence of developing new ceramic tile manufacturing
technology:

In this case it is also vital to note that the
socio-economic consequences of replacing the
old technology of producing ceramic tiles in
tunnel kilns with a new technology using auto-
mated conveyer assembly lines with slit kilns
were so obvious that adoption of the new meth-
od in industry . . . not only encountered no re-
sistance, but, on the contrary, a whole number
of enterprises and agencies sought additional
ways to move up the fixed schedule for putting
this system into operation. 99

In certain instances, however, the age of a product
determines the applicability of a special innovation-
related program. For example, compensation for high
start-up costs from the Fund for Assimilation of New
Technology is only permitted for new products, where
"newness" is defined bureaucrat ically to apply "if
(a) it is the first instance of the product's pro-
duction in the USSR, or (b) no more than two years
have elapsed since it was first introduced in the
USSR."10t)

Special Soviet programs to facilitate diffusion
resemble those in any advanced industrial country.

239

Technical information services, managed by the All-
Union Institute for Scientific and Technical Infor-
mation (VINITI) , are among the best in the world.
VINITI disseminates Soviet journals, translation
journals, and comprehensive abstracts of foreign and
domestic publications, and assists in publicizing
patents. Most industrial ministries have similar
agencies. Academy, university, ministries, and S&T
societies host frequent technical conferences which
facilitate personal interaction, a potent means of
technology transfer. Actual transfer of personnel
with the direct or indirect intent of transferring
technology tends to occur less frequently, and is
particularly rare across ministerial boundaries.
Standardization programs, such as those concerning
design documentation, facilitate transfer but are a
relatively recent development. Finally, a common
Soviet technique of technology diffusion which avoids
many of the administrative problems described previ-
ously is the construction of entirely new facilities
which "embody" the new technology. However, the per-
formance of the Soviet construction industry is it-
self quite poor, especially concerning lead times,
and the shift of investment funds away from new con-
struction to reconstruction of facilities reduces the
scope for this approach.

In sum, the Soviet innovation and diffusion pro-
cesses are rendered similar, if not indistinguishable,
by the nature of Soviet economic organization and ad-
ministration. The general absence of competitive
pressures in particular is a severe deterrent to rap-
id diffusion. Special programs designed to encourage
internal technology transfer, particularly relating
to information and (potentially) standardization, can
alleviate some of the problems but are not, in our
view, sufficiently effective to overcome barriers to
innovation created by fundamental attributes of the
Soviet economic mechanism.

240

FOOTNOTES

1. See L. S. Blyakhman, ed., Voprosy ekonomiki i
planirovaniya nauchnykh issledovaniy (Leningrad, 1968),
p. 93; N. I. Dryakhlov, S. I. Nikishov, Yu. K. Plet-
nikov, and S. V. Shakhardin, eds., Nauchno-tekhni-
cheskaya revolyutsiya i obshchestvo (Moscow, 1973) ,

p. 446; V. P. Aleksandrova, ed., Problemy planirovan-
iya i effektivnosti razvitiya nauki i tekhniki v
ukrainskoy SSR (Kiev, 1976), p. 50; V. Sominskiy and
L. Blyakhman, eds., Ekonomicheskiye problemy povyshen-
iya effektivnosti nauchnykh razrabotok (Leningrad :
Lenizdat, 1972), p. 177; V. N. Arkhangel'skiy , Organ-
izatsionno-ekonomicheskiye problemy upravleniya nauch-
nymi issledovaniyami (Moscow, 1977), p. 33; V. I.
Kushlin, Uskoreniye vnedreniya nauchnykh dostizheniy
v proizvodstvo (Moscow: Ekonomika, 1977), p. 3; Nolt-
ing, Sources of Financing the States of the Research,
Development, and Innovation Cycle in the USSR, p. 3.

2. Kanygin, Nauchno-tekhnicheskiy potentsial , p.
225.

3. L. S. Blyakhman, "Nauka kak otrasl proizvodst-
vennoy deyatel'nosti," in Blyakhman, ed., Voprosy eko-
nomiki i planirovaniya nauchnykh issledovaniy, p . 15 .

4. Berliner, The Innovation Decision in Soviet In-
dustry, pp. 103-104.

5. K. I. Taksir, Integratsiya nauki i proizvodstva
pri sotsializme (Moscow: Znaniye, 1975), p. 14; Kush-
lin, op. cit., p. 122.

6. V. G. Shteingauz, Ekonomicheskiye problemy re-
alizatsii nauchno-tekhnicheskikh razrabotok (Moscow.
1976), p. 118.

7. A. Zalkind, "Akademiya dlia 'neakademicheskikh'
nauk," Literaturnaya gazeta, 12 (March 24, 1976), p.
11.

241

8. A. N. Bortnyakh, ed., KPSS i sovremennaya nauch-
no-tekhnicheskaya revolyutsiya (Kiev, 1974), pp. 379
380.

9. Zalkind, op. cit.

10. See Tom Burns, "Models, Images, and Myths," in
William H. Gruber and Donald G. Marques, eds., Factors
in the Transfer of Technology (Cambridge, Massachu-
setts: MIT Press, 1969), pp. 11-23. One of the best
discussions of Soviet views of innovation is by Kany-
gin. See his Nauchno-tekhnicheskiy potentsial , pp.
151-213.

11. V. I. Berlozertsev, "Soedineniye nauchno-tekh-
nicheskoy revolyutsii s preimushchestvami sotsializ-
ma," in Problemy soyedineniya dostizheniy nauchno-
tekhnicheskoy revolyutsii s preimushchestvami sots-
ializma (Voronezh, 1974), pp. 11-12.

12. Kanygin, Nauchno-tekhnicheskiy potentsial, p.
222.

13. Berliner, op. cit. , p. 140.

14. Zavlin et al, Trud v sfere nauki (Moscow,
1973, 2nd edition), pp. 123-125, 129, 206-207.

15. Ibid. (First edition), p.

16. Berliner, op. cit. , p. 116.

17. Zaleski et al, Science Policy in the USSR,
p. 93.

18. D. Bobryshev and Ye. Nisevich, Setevyye metody
v upravlenii (Moscow, 1973), p. 14.

19. See Robert W. Campbell, "Management Spillovers
from Soviet Space and Military Programs," Soviet
Studies, XXIII, 4 (1972), pp. 586-607.

20. See Yu. I. Maksimov, "Second Wind for Network
Methods," Ekonomika i organizatsiya promyshlennogo

242

proizvodstva, 4 (July-August 1976), pp. 205-211; V.
G. Afanasyev and V. S. Chesnokov, "Sistemy tselevogo
planirovaniya — instrument effektivnogo upravleniya
nauchnymi issledovaniyami," in Nauchnoye upravleniye
obshchestvom (Moscow: Mysl1 , 1972), VI, pp. 268-331;
D. M. Gvishiani, ed., Voprosy teorii i praktiki uprav-
leniya i organizatsii nauki (Moscow: Nauka, 1975),
pp. 17-22, 82-95; G. M. Dobrov et al, Programmno-
tselevoy metod upravleniya v nauke, pp. 24-27.

21. V. I. Dobuzhinskiy, D. D. Katanov, and E. L.
Rokhvarger, "Razrabotka novoy tekhnologii keramiches-
kikh plitok" (Development of A New Technology of Cer-
amic Tiles), p. 7. Soviet Side of the Joint Soviet-
American forking Subgroup on Planning and Management
of Scientific Research and Development. Unpublished
(draft) paper, 1976.

22. Yefimov et al, "Development and Realization of
A Program of Comprehensive Mechanization of Funda-
mental and Auxiliary Processes of Production at the
Moscow Production Association ZIL," pp. 7-8.

23. Zaleski et al, Science Policy in the USSR, p.
280.

24. Gvishiani, "Centralized Management of Science:
Advantages and Problems," p. 103.

25. Ivanov, "Preodoleniye prepyatstviy i stimuli-
rovaniye pri vnedrenii novoy tekhniki i novykh metod-
ov upravleniya," p. 10.

26. Ibid.

27. Ibid., p. 12.

28. A. G. Orlov, Oplata truda rabotnikov nauki
(Moscow: Nauka, 1973), p. 52.

29. Ivanov, op. cit. , p. 11.

30. Ibid.

243

31. XXIV Syezd KPSS: Stenograficheskii otchet (Mos-
cow: Politizdat, 1971), I, pp. 80-81.

32. L. M. Bashin, "Ekonomicheskiye problemy vnedren-
iya novoy tekhniki," Voprosy izobretatel'stva, 7 (1975),
p. 12.

33. See G. D. Anisimov, L. S. Glyazer, A. M. Omarov,
V. G. Pankratyev, and M. P. Ring, Nauchno-tekhnicheskiy
progress i khozyaystvennaya reforma (Moscow: Nauka,
1969), pp. 119-127; "The Quality of Designs," Pravda
editorial, May 13, 1977.

34. L. S. Blyakhman, "The Association: Experience
and Prospects," Pravda, December 1, 1971.

35. Ivanov, op. cit., p. 21.

36. Ibid.

37. Ibid. , p. 22.

38. K. I. Taksir, Nauchno-proizvodstvennyye ob"yedi-
neniya (Moscow: Nauka, 1977), pp. 42-53, 57-58; Yu.
Subotskiy, Novyi etap razvitiya ob"yedineniy v pro-
myshlennosti (Moscow: Znaniye, 1973), p. 26; E. I.
Gavrilov, Ekonomika i ef fektivnost [ nauchno-tekhni-
cheskogo progressa (Minsk: Vyshaya shkola, 1975), p.
290; L. N. Andrukhovich , Upravleniye kachestvom (Mos-
cow: Znaniye, 1976), p. 47.

39. Taksir, Nauchno-proizvodstvennyye ob"yedineniya ,
p. 57; G. A. Dzhavadov, Upravleniye nauchno-tekhni-
cheskim progressom (Moscow: Znaniye, 1976), p. 23.

40. Taksir, op. cit., p. 132.

41. V. Pokrovskiy, "Peres traivayas' na marshe,"
Sotsialisticheskaya industriya, July 13, 1977, p. 2.

42. Taksir, op. cit., pp. 125-154; Louvan E. Nolt-
ing, The 1968 Reform of Scientific Research, Develop-
ment, and Innovation in the USSR, U.S. Department of
Commerce, Foreign Economic Report No. 11 (Washington
D.C., 1976), p. 16; Shteingauz, op. cit. , pp. 120-

244

122, 127 and her "Novye organizatsionnyye formy svya-
zi nauki s proizvodstvom," in Ekonomika i organizatsi-
ya promyshlennogo proizvodstva, 3 (1973), pp. 46-47;
M. A. Yudelevich and M. A. Gusakov, "Puti sokrashchenii
tsikla ' issledovaniye-proizvodstvo, "' in Blyakhman,
ed. , Voprosy ekonomiki i planirovaniya nauchnykh is-
sledovaniy (Leningrad: Lenizdat, 1968), pp. 93-95; G.
A. Dzhavadov, "Nauchno-proizvodstvennyye ob"yedineni-
ya — forma integratsii nauki, tekhniki, proizvodstva,"
Sovetskoye gosudarstvo i pravo, 1 (1975), p. 37, 43-
44; Andrukhovich, op. cit., pp. 48-50; Sominskiy and
Blyakhman, Ekonomicheskiye problemy povysheniya ef-
fektivnosti nauchnykh razrabotok, pp. 179-180.

43. Berliner, op. cit. , p. 135.

44. See Dzhavadov, "NPO — forma integratsii nauki,
tekhniki, proizvodstva," p. 37; Yu. V. Subotskiy, Raz-
vitiye ob"yedineniy v promyshlennosti: Voprosy teorii
i metodologii (Moscow, 1977), pp. 66-67; V. Kochikyan
and V. Kushkin, "Osnovy khozyaystvennogo rascheta v
nauchno-proizvodstvennykh ob"yedineniyakh," Planovoye
khozyaystvo, 7 (1977), pp. 25-26; K. I. Taksir, "Nau-
chno-proizvodstvennyye ob"yedineniya," Voprosy ekono-
miki, 11 (1972), pp. 48-49 and his Nauchno-proizvodst-
vennyye ob"yedineniya, p. 39; Pokrovskiy, "Perestrai-
vayas' na marshe," p. 2.

45. Taksir, Nauchno-proizvodstvennyye ob"yedineniya ,
pp. 35, 39-40; Shteingauz, Ekonomicheskiye problemy
realizatsii nauchno-tekhnicheskikh razrabotok, p. 124;
V. N. Arkhangel'skiy, Planirovaniye i finansirovaniye
nauchnykh issledovaniy (Moscow: Finansy, 1976), pp.
158-160; Kochikyan and Kushkin, op. cit., p. 26.

46. Yu. Kanygin and S. Kostanyan, "Nauchno-proiz-
vodstvennyi tsikl," Voprosy ekonomiki, 12 (1976), p.
61.

47. Yu. M. Mikhnevich, Ekonomicheskiye problemy
upravleniya nauchno-tekhnicheskim progressom (Lenin-
grad, 1974), p. 57.

48. Taksir, Nauchno-proizvodstvennyye ob"yedineniya,
p. 110.

245

49. Ibid. , p. Ill and Arkhangel'skiy, Planirovaniye
i f inansirovaniye nauchnykh issledovaniy, p. 162.

50. These tasks are listed in the statute on the
NPO. See "Polozheniye o nauchno-proizvodstvennom ob"-
yedinenii," Sobraniye postanovleniy pravitel' stva
SSSR, 2 (1976), pp. 24-25. See also Subotskiy, Raz-
vitiye ob"yedineniy v promyshlennosti, p. 67 and
Dzhavadov, "NPO — forma integratsii nauki, tekhniki,
proizvodstva," pp. 38-39.

51. Taksir, Nauchno-proizvodstvennyye ob"yedineni-
ya, pp. 43-79.

52. Ibid., pp. 38-39, 74-79; Kushlin, Uskoreniye
vnedreniya nauchnykh dostizheniy v proizvodstvo, p.
111.

53. Ibid. See also Pokrovskiy, "Peretraivayas' na
marshe," p. 2.

54. Taksir, Nauchno-proizvodstvennyye ob"yedineni-
ja, pp. 48-49, 139-140.

55. Ibid., pp. 32, 37 and L. A. Bulochnikova et al,
eds., Problemy sovershenstvovaniya upravleniya sots-
ialisticheskoy ekonomikoy (Moscow: Mysl', 1976), pp.
135-136.

56. Taksir, Nauchno-proizvodstvennyye ob"yedineni-
_ya, pp. 17-22.

57. K. I. Taksir, "Nauchno-proizvodstvennyye ob"ye-
dineniya," Voprosy ekonomiki, 11 (1972), p. 50.

58. Taksir, Nauchno-proizvodstvennyye ob"yedineni-
ja, pp. 36, 55-56, 78, 157-158 and Shteingauz, Eko-
nomicheskiye problemy realizatsii nauchno-tekhniches-
kikh razrabotok, p. 124.

59. Nolting, The 1968 Reform, p. 16.

60. Sominskiy and Blyakhman, Ekonomicheskiye prob-

246

lemy povysheniya effektivnosti nauchnykh razrabotok,
pp. 188-189 and Dzhavadov, "NPO — forma integratsii
nauki, tekhniki, proizvodstva," p. 40.

61. Taksir, Nauchno-proizvodstvennyye ob"yedineni-
y_a, pp. 54-55.

62. "Polozheniye o NPO," p. 23.

63. B. Tabachnikas and M. Sklyar, "Khozyaystvennyy
raschet nauchno-proizvodstvennykh ob"yedineniy," Vo-
prosy ekonomiki, 12 (1976), p. 73.

64. Kushlin, Uskoreniye vnedreniya, p. 112. In its
decision approving the NPO statute the USSR Council
of Ministers stipulated that the USSR Ministry of Fi-
nance and the Central Statistical Administration had
to draw up within six months appropriate bookkeeping
and statistical reporting forms for the NPOs.

65. See Nolting, The 1968 Reform, p. 16; Gavrilov,
Ekonomika i ef fektivnost ' nauchno-tekhnicheskogo ,
pp. 297-305; B. Tabachnikas and M. Sklyar, "Otsenka
raboty i printsipy obrazovaniya fonda material'nogo
pooshchreniya nauchno-proizvodstvennykh ob"yedineniy,"
Planovoye khozyaystvo, 2 (1974), pp. 123-124.

66. Tabachnikas and Sklyar, "Khozyaystvennyy ras-
chet NPO," p. 77 and Taksir, Nauchno-proizvodstven-
nyye ob"yedineniya, pp. 101-112.

67. Gavrilov, op. cit., pp. 294-295; Mikhnevich,
op. cit. , pp. 71, 85.

68. Subotskiy, Razvitiye ob"yedineniy v promysh-
lennosti, p. 5 and Taksir, Nauchno-proizvodstvennyye
ob"yedineniya, p. 158.

69. R. M. Shteinbok, "Komu vnedryat' novuyu tekh-
niku?" Ekonomika i organizatsiya promyshlennogo pro-
izvodstva, 6 (1976), pp. 78-79.

70. Shteingauz, Ekonomicheskiye problemy realiza-

247

tsii nauchno-tekhnicheskikh razrabotok, p. 125.

71. See Taksir, Sushchnost' i formy soyedineniya
nauki s proizvodstvom pri sotsializme (Moscow: Vys-
shaya Shkola, 1974), pp. 92-104; V. Pavlyuchenko , "Ot
stola konstruktura do zavodskogo konveiera," Pravda,
June 13, 1971 and his Ekonomicheskiye problemy uprav-
leniya nauchno-tekhnicheskim- progressom (Moscow: Nau-
ka, 1973), pp. 202-213; Shteinbok, op. cit. , pp. 76-
85; Kanygin, Nauchno-tekhnicheskiy potentsial, pp.
237-241.

72. See Shteinbok, op. cit., pp. 79-80 and L. Davy-
dov and R. Shteinbok, "Formy organizatsii vnedreniya
novoy tekhniki," Voprosy ekonomiki, 9 (1977), p. 134.

73. See Taksir, Sushchnost* i formy soyedineniya
nauki s proizvodstvom pri sotsializme, pp. 92-104 and
his Nauchno-proizvodstvennyye ob"yedineniya, pp. 24-
25.

74. See the excellent article by John Lowenhardt,
"The Tale of the Torch: Scientists-Entrepreneurs in
the Soviet Union," Survey, XX, 4 (93) (Autumn 1974),
pp. 113-121.

75. Ibid., pp. 117-118.

76. K. Taksir and M. Krasnokutskiy, "Formy organi-
zatsii vnedreniya novoy tekhniki," Voprosy ekonomiki,
1 (1977), p. 50; V. Pokrovskiy, "Novaya tekhnika:
Dorogi i porogi," Ekonomicheskaya gazeta, 10 (March
10, 1976), p. 10.

77. Taksir and Krasnokutskiy, op. cit., p. 50.

78. Shteinbok, "Komu vnedryat' novuyu tekhniku,"
p. 80.

79. K. I. Taksir, Integratsiya nauki i proizvodstva
pri sotsializme (Moscow: Znaniye, 1975), pp. 47-48.

80. Ekonomika i organizatsiya promyshlennogo pro-

248

izvodstva, 5 (1977), p. 160. These difference of
view were expressed in the debate in this issue of
EKO (pp. 143-146) under the subject, "Komu vnedryat'
novuyu tekhniku?" (To Whom Should the Introduction
of New Technology Be Entrusted?) This was the title
of Shteinbok's essay that appeared in the journal the
year before. The discussion in the May 1977 issue
contains reactions to Shteinbok's article and call
for specialized introduction organizations for new
technology.

81. Ivanov, op. cit., p. 7.

82. L. M. Gatovskiy, Nauchno-tekhnicheskiy progress
i ekonomika razvitogo sotsializma (Moscow: Nauka,
1974), p. 202.

83. "USSR Short Answers," p. 57.

84. Berliner, The Innovation Decision in Soviet In-
dustry, p. 271.

85. Zaleski et al, Science Policy in the USSR, p.
119.

86. Ivanov, op. cit., p. 8.

87. Berliner, op. cit., p. 493 and Ivanov, op. cit.,
pp. 8-9.

88. Berliner, op. cit. , p. 488.

89. Ivanov, op. cit. , p. 7.

90. Ibid.

91. "USSR Short Answers," p. 25.

92. Ibid., p. 29.

93. P. A. Sedlov, Material' noye stimulirovaniye ra-
botnikov za sozdaniye i osvoyeniye novoy tekhniki
(Moscow: Ekonomika, 1975), p. 55.

249

94. Ibid., p. 56.

95. Orlov, Oplata truda rabotnikov nauki, p. 118.

96. Ya. Kolotyrkin, "0 rezervakh uvelicheniya ot-
dachi ot nauchnogo potentsiala," Kommunist , 8 (1974),
p. 53.

97. A. Konson, "Pokazateli nauchno-tekhnicheskoy
deyatel'nosti Nil, KB, i NPO i proizvoditel'nosti
truda nauchnykh rabotnikov," Planovoye khozyaystvo,
3 (1976), pp. 133-140.

98. 0. I. Volkov, Planovoye upravleniye nauchno-
tekhnicheskim progressom (Moscow: Nauka, 1975), p. 157

99. Dobuzhinskiy et al, op. cit. , p. 12.
100. Berliner, op. cit., p. 200.

250

XI CURRENT ISSUES AND TRENDS
IN SOVIET SCIENCE POLICY

Science policy has become a subject of continuous
discussion and vigorous debate in the USSR since at
least the mid-1960s. Indeed, the great attention giv-
en to S&T issues in domestic and foreign policy re-
flects the extent to which a perceived "technological
imperative" has come to dominate and divide the Krem-
lin leadership. While many of the basic problems
themselves are not new, Soviet perceptions of them
have broadened and changed along with the scope of
official motivation to use science and technology
more effectively as an instrument of policy and tool
of economic progress. As a result the political lead-
ership has begun to reexamine some of the fundamental
assumptions, managerial attitudes, and organizational
arrangements which underlay science policy in the past
and to adopt some new approaches and directions for
the future.

THE CONTEMPORARY SCIENCE POLICY DEBATE:
CONTEXT AND CONTENT

The current debate has been prompted by two impor-
tant cognitive discoveries. First is the rather be-
lated awakening of the ruling elite to the full sig-
nificance of the development and role of science and
technology in the world, roughly since mid-century.
These changes have been dubbed the "contemporary sci-
entific and technological revolution" (hereafter ab-
breviated as STR) , largely a euphemism for the com-
puter age. The changing conditions and new demands
associated with this new stage of industrial revolu-
tion are seen as placing unprecedented importance on
scientific and technical progress. Such progress be-

251

comes not only the key force driving modern society
forward but also a major arena of competition between
the world's two opposing social systems. Underlying
the notion of the STR is also implicit — and sometimes
explicit — recognition of Russia's relative backward-
ness and growing technology gap with the West, espe-
cially the United States. As a letter of appeal from
dissident but concerned Soviet scientists to Party
and government leaders in March 1970 noted frankly,
with respect to the computer age: "We are simply liv-
ing in a different era. The second industrial revo-
lution came along and now, at the onset of the seven-
ties, we see that far from having overtaken America,
we are dropping further and further behind. "1 Thus,
a "historic" task facing the USSR today, as defined
by General Secretary Brezhnev at the 1971 Party con-
gress and reaffirmed by the 1976 congress, is "to
combine organically the achievements of the STR with
the advantages of the socialist economic system, to
unfold more broadly our own, intrinsically socialist
forms of fusing science with production. "2

Second, there has also been growing realization
that the Soviet economy is approaching the limits of
"extensive" growth and entering a new era that calls
for more "intensive" methods of development. Declin-
ing supplies of manpower and material resources re-
quire a basic shift in development strategy and great-
er emphasis on qualitative improvements rather than
quantitative increases of inputs as the main source
of future growth. Already at the end of the 1960s,
Brezhnev declared firmly that intensification "be-
comes not only the main way but the only way of de-
veloping our economy." Moreover, in this approach he
told the 1971 Party congress, "the acceleration of
S&T progress forges into first place both from the
point of view of current tasks and of the long-term
future." Premier Kosygin similarly insisted at the
1976 congress that without faster translation of S&T
into production "the economy can no longer success-
fully advance along the path of intensification and
quality improvement ."3

252

International and domestic pressures have combined,
therefore, to make the accleration of S&T progress a
major issue of the 1970s and beyond. Just as he had
defined this to be the "key task" of economic policy
in 1971, Brezhnev also listed it first among the "key
problems" of the period of the Tenth Five Year Plan
(1976-1980). Indeed, the General Secretary affirmed,
"In our entire economic development perhaps no tasks
today are more urgent and more important . '"*

There is also enhanced awareness in Moscow of the
need to raise the quality of R&D planning and manage-
ment. No longer can science policy afford to be built
on the basis of "subjective evaluations and wishes,"
contends V. A. Trapeznikov, a first deputy chairman
of the GKNT. Gvishiani describes as a major task of
the day, "To put the development of science itself on
a strictly scientific basis." Dr. Semyon Mikulinsky,
a leading science policy expert, similarly stresses,
"The whole point is that science must be brought to
bear on the management of science itself. "5

Accordingly, there has been a proliferation of
science policy studies and "research on research" in
the USSR during the last decade. Virtually the en-
tire social science research sector has been put to
work on the problems of acclerating S&T progress. The
main purpose of such studies, Gvishiani notes, is to
provide a strong "theoretical basis on which the fun-
damentals of science policy are worked out." Under-
lying the growth of the "science of science" movement
is an intrinsic belief in and professed need "to study
science as a controllable system and to attempt a more
thorough exploration of the interrelationship of dif-
ferent aspects of this system with a view to increas-
ing the efficiency with which it functions.""

In line with the basic Soviet approach to science
and technology generally, the dominant emphasis in
both theoretical study and practical policy has been
on the need for a "systems approach." As Gennady Do-
brov explains, "More than half a century of experi-
ence in the formulation and implementation of Soviet
State science policy shows that one cannot expect to

253

be consistently successful in science management if
one pursues only one part of the system of goals."'
Official Soviet claims to the contrary notwithstand-
ing, the Kremlin still lacks comprehensive and coher-
ent S&T policies. This is especially true in the
civilian sector where capabilities for problem de-
finition and systems management have been much more
deficient than in the military and space areas. On
both the theoretical and practical levels recent ef-
forts point to the need and determination of Soviet
leaders to develop a greater integrative capability,
analytical and administrative, in order to apply more
effectively a systems approach to S&T policy.

While there are still many loose ends and untreat-
ed questions in the literature, nonetheless the work
of Soviet specialists in wrestling with complex S&T
issues is impressive. A new sophistication is evi-
dent. More and more, new ideas and attitudes are be-
ginning to penetrate and shape S&T thinking and pol-
icy making in the Kremlin.

Much of the debate on how to improve performance
and to promote S&T progress has centered on six is-
sues. One prominent set of concerns relates to the
question of expanding the boundaries of science pol-
icy and of integrating science policy with economic
policy. A second major theme is the need to move to
an intensive growth strategy for science and technol-
ogy with an emphasis on increasing the efficiency and
effectiveness of R&D. The four remaining issues are
essentially subsets of the latter problem. Taken to-
gether, they deal with ways of raising overall per-
formance through greater organizational flexibility
and institutional restructuring, improved planning
and resource allocation, and more effective manage-
ment and motivation throughout the research-to-pro-
duction process. A common theme punctuating and dom-
inating discussion in all these issues is the need to
apply a systems approach to contemporary problem
solving. The whole thrust and tone of the debate are
in line with the intrinsically comprehensive and cen-
tralized approach of Kremlin decision makers. It is
also not accidental that "linkage" and "integration"

254

have become the key terms of the debate. They point
clearly to the major interface difficulties and de-
ficiencies that underlie such an approach in general
and the Soviet R&D system in particular. Behind So-
viet thought and action is the hope that "the holes
in the whole" can be filled and more effective cou-
pling can be achieved in the creation and application
of new technology.

INTEGRATING SCIENCE POLICY AND ECONOMIC POLICY

An implicit feature of Soviet thought in the 1970s
was the movement towards a broader concept of science
policy and the closer integration of R&D with the to-
tality of domestic and foreign policy. Traditional-
ly, scientific R&D has been conceived apart from the
wider political and economic context rather than as
an organic part of it. In fact, science has often
been viewed more as an appendage of social and cul-
tural policy than as an aspect of economic policy.
Increasingly, however, attention is being given to
its status as a direct force of production and key
source of economic growth in the era of the STR. The
focus is on relating S&T to a much broader range of
national aims and activities, on the role of R&D in
solving contemporary economic and social problems .

In line with this more strategic approach is the
emphasis on external rather than internal criteria
in science policy. By the end of the 1960s Gvishiani
had sounded the new line. He noted that R&D planning
and management was no longer simply a question of the
rational planning of science expenditures, of the
training of scientific manpower, of the allocation of
resources, or of the supply of scientific instruments,
"The issue is broader and deeper," the deputy chair-
man of the GKNT affirmed,

It is about the future, about the long-term
development of socialist countries, about
the very fate of the world and of socialism.

255

For now only that system can win which is
able to assure itself a vanguard position
in scientific and technical progress. °

To phrase the issue somewhat differently, the ob-
ject of planning has gradually shifted from primarily
"new technology" to "scientific and technical prog-
ress" more broadly. Prior to the Eighth Five Year
Plan (1966-1970), planning agencies operated with on-
ly the concept of new technology. The notion of tech-
nical progress was confined to theoretical social and
economic literature. Brezhnev himself observed in
1971, however, that the demands of the times required
a change of focus: "In an age when the role of sci-
ence as a direct force of production keeps growing,
separate scientific achievements, no matter how bril-
liant, are no longer the central issue. What is cen-
tral," the General Secretary asserted, "is a high S&T
level of production as a whole.""

However, there is no consensus in the Soviet Union
regarding the definition of "new technology," "the
technical development of production," or "scientific
and technical progress. "10 To a large extent, disa-
greements about the meaning of "managing S&T progress"
replicates the ongoing disputes about the general con-
cept of "management." A semantic jungle exists in
both spheres. 11 In essence, the issue is how to make
the concept operational, how to designate the bound-
aries of S&T progress — its structure, content, and
component elements — as an object of planning. Without
a precise definition it is extremely hard to estab-
lish the place and role of the concept in the general
system of economic planning and management.-^ Acade-
mician Fedorenko admits, in regard to the prolem of
modeling technical progress and its economic, social,
and ecological consequences, "we are only at the very
beginning of complex and arduous research." Signifi-
cantly, with the Tenth Five Year Plan a new subdivi-
sion on basic indicators of S&T progress was added to
the plan for the development of science and technolor
gy. It represents the first attempt to define some
basic technical and economic parameters characteriz-.
ing the level of production and the manufacture of

256

output. However, in the words of one high Gosplan
official, the choice of appropriate indicators re-
mains problematic, because "there is essentially no
experience in this area. "13

As Kremlin policy makers have focused less and
less on R&D as a relatively isolated entity and more
and more on the interplay of R&D with industry, of-
ficial insistence grows that R&D and its applications
be closely linked. The aim of policy cannot be sole-
ly the expansion of S&T per se or "science for sci-
ence' s sake" but must include its use as an instru-
ment for economic growth and industrialization. "Rel-
evance" has become a big issue, if not the fad of the
day, as the Soviet leadership seeks greater and fast-
er payoffs from the nation's substantial investment
in scientific R&D. Indeed, a major challenge con-
sists in formulating a science policy to promote in-
novation, to build an effective strategy of research
utilization. In the early 1970s Brezhnev, in fact,
singled out the application of R&D results as the
most important but also the most deficient aspect of
S&T policy. "If we examine all the links of the in-
tricate chain that binds science to production, we
shall easily see the weakest links are those relating
to the practical realization of scientific achieve-
ments, to their adoption in mass production." It was
necessary, the General Secretary stressed, "to create
conditions compelling enterprises to manufacture the
latest types of products, literally to chase after
S&T novelties, and not to shy away from them, figura-
tively speaking, as the devil shies away from holy
water. "1*

Despite the espoused need for more effective cou-
pling, however, the integration of science policy and
economic policy has been slow and difficult to achieve
in practice. In May 1974 the Chairman of Gosplan
still noted, "It is urgently necessary to shift from
the planning of S&T potential, which is what the S&T
plan is at present, to planning the mass production
and diffusion of new technology ."!-> Planning R&D re-
mains geared to the creation of new technology and

257

advances in science rather than to the application
of existing knowledge and achievements. This causes
one analyst to complain:

The system of managing S&T progress is con-
centrated on the means for achieving goals
and not on the goals themselves, for the
sake of which new technology is being de-
veloped and introduced. Thus, the plan is
drafted and accounting is conducted not ac-
cording to the results of technical progress
but only in terms of the means for achieving
them.16

Research and production continue to coexist as large-
ly autonomous worlds. "Basic economic activity" is
still generally planned separately from "technical
progress." The whole research-production cycle is
not yet unified. Above all, views continue to dif-
fer over how to achieve the interfacing of science
and industry.

SWITCHING TO AN INTENSIVE GROWTH STRATEGY
FOR SCIENCE AND TECHNOLOGY

Another major theme of the 1970s was, to use Do-
brov's words, "the shift in emphasis in national sci-
ence policy from a quantitative to a qualitative ap-
proach. "17 Since 1955 the number of scientists in
the USSR has doubled nearly every five years, growing
six times faster than the country's total work force.
Official expenditures on science have also expanded
at the same rapid pace, climbing from 1.7 billion ru-
bles in 1955 to 17.5 billion 20 years later. Accord-
ing to Soviet estimates, if these high growth rates
are sustained, then by the year 2000 there will be
approximately 21 million scientists and 85 million
persons working in the general sphere of science and
science services! Similarly, the share of alloca-
tions to R&D would consume 60 percent of the total

258

national budget ! 1° This has given rise to the feel-
ing, at least in some Moscow circles, that the satu-
ration point has been reached and that limits need
to be imposed on the growth of scientific manpower
and expenditures. 19

Alternatively, the need for greater productivity
in the R&D sector has become increasingly apparent.
As long as science and technology developed predomi-
nantly through extensive means — by exponential in-
creases in the number of scientists, the size of bud-
gets, the amount of equipment, the number of facili-
ties, etc. — there was no particular need to analyze,
much less improve, organizational structures and per-
formance, observes G. N. Volkov. The switch to an
intensive path of development, however, requires
greater attention to the effective use of available
S&T resources and achievements. 20 Under these modi-
fied conditions, a major aim of science policy, Do-
brov notes, "is to ensure a rate of growth in the
performance of science which keeps ahead of the high
absolute rates of growth of resources and organiza-
tional parameters of scientific systems. "21

Just as for broader economic policy, therefore,
the question of rational resource allocation for sci-
ence policy has become dominant. At the 1971 Party
congress Premier Kosygin signaled explicitly the need
for a general turn of course:

Realization of the possibilities of the STR
requires more and more expenditures. How-
ever, at each stage of its development the
state has available only a fixed amount of
resources that it can allocate for these
purposes. Thus the need arises for choice
and for the preferential development of the
most important directions of S&T progress,
for the formulation and implementation of a
uniform national science policy. 22

To dispel any lingering doubts about the continuing
importance of this course, Brezhnev told the Twenty-
Fifth Congress five years later, "Emphasis on effi-

259

ciency — and this must be said again and again — is the
most important component of our entire economic strat-
egy. In the 1980s accomplishment of this task will
become especially urgent. "23

Under these conditions, problems of choice, prior-
ity, and policy have become increasingly important.
In turn, they have fed the quest for relevance and
the drive to weed out unpromising and unimportant
lines of research. That much still remains to be
done in this regard, however, is evident from Brezh-
nev's remarks to the presidents of the academies of
sciences of several socialist states in February 1977,
"But why not admit it," he said frankly. "The live and
healthy tree of science sometimes has dry and even
barren branches. It still happens sometimes that re-
search is conducted in completely peripheral or even
in simply fruitless directions. "24

Unfortunately, there are no reliable statistics
that show the impact of the government pressure for
technology development and delivery on the actual
structure of R&D expenditures. It appears, however,
that the commitment to fundamental research remains
firm and that there has been no significant shift of
funds away from basic science. Indeed, the budget of
the USSR Academy, the citadel of basic science, has
reportedly grown faster in recent years than the na-
tional budget for R&D as a whole. 25

These pressures for economy in R&D and for improv-
ing research utilization, in turn, have generated ris-
ing interest in cost effectiveness studies. An in-
tense search is underway for criteria and ways by
which to measure the return on investment in new tech-
nology. Opinions differ greatly and obstacles abound,
however. A number of specialists caution against ad-
hering too stringently to economic cost alone in as-
sessing new technology. Some stress the need to take
into account "social effectiveness," as expressed in
improved social relations or better working conditions,
Similarly, a few champion what is sometimes called
"ecological" or "wasteless" technology, such as pol-
lution control devices. Adopting yet a different

260

view, others argue that "science is not a lottery
with guaranteed prizes. Many lines of research pro-
duce no profits, or at least none measurable in terms
of money." There are also some who emphasize that
the magnitude of the socio-economic return depends
not only on the result itself, but also on the speed
and scale of its application. Many a good scientif-
ic idea or engineering solution quickly becomes ob-
solete. 26

In addition to this diversity of opinion about the
efficiency of technology, various procedures have
been developed for calculating its effectiveness. Un-
til recently, each ministry and state committee used
its own method and set of indicators. Without uni-
form methodology, however, any comparative evalua-
tion and choice among alternative S&T designs is im-
possible. Significantly in February 1977, a unified
methodology for the calculation of the economic re-
turn of new technology, inventions, and efficiency
proposals was made compulsory for all branches of the
economy. The procedures contained in the methodology
had been tested since 1971 in the unified fund minis-
tries. However, in spite of the comprehensiveness of
the methodology and the extensive preparation and ex-
perimentation behind it, the individual ministries
are still required to devise instructions for adap-
ting it to their own accounting practices and cate-
gories of output. 27

In general, past procedures for measuring economic
return have had major deficiencies. The anticipated
effect has been systematically exaggerated, and the
actual return is not properly considered or monitored.
In fact, no statistics are kept in this regard. The
system of incentives is also pegged to the calcula-
ted return. Not surprisingly, therefore, Lev Gatov-
sky, a prominent authority on the subject, confirms
frankly, "Up to now the economic effectiveness of new
technology has not been a leading principle in econom-
ic management or an object of planning. "2° V. S. Ta-
rasovich and Yu. B. Kliuka add,

261

Calculations of effectiveness, as a rule,
are made only after basic work is completed,
that is, when expenditures have already been
made and time and resources are spent. Con-
sequently, these calculations essentially
are directed not to substantiating the ex-
pediency of conducting work but to the 'just-
ification' of costs already incurred. "2°

At a national round table on S&T progress, held in
Moscow in the fall of 1975, it was noted that the
dominant engineering thought of the country remains:
"I create technology and leave the effectiveness of
production to others. "30 Thus, much remains to be
done before substantial progress can be made in mov-
ing towards an intensive mode of growth and before
an effective strategy for using S&T can be worked out

ACHIEVING ORGANIZATIONAL FLEXIBILITY
AND INSTITUTIONAL RESTRUCTURING

In seeking ways to improve effectiveness of R&D,
Soviet analysts and policy makers have begun to think
seriously, really for the first time, about Organiza-
tion. Basic concepts related to organization and the
structural requirements of technical progress are be-
ing reexamined and revised. A relatively static view
of organizational structure as an immutable given is
being replaced by a more dynamic conception of organ-
ization as a set of complex variables about which con-
siderable choice can be exercised.

Organizational design itself is becoming recog-
nized as a distinct and important area of expert anal-
ysis and management specialization. To be sure, there
has long been a penchant for organizational engineer-
ing. Almost by reflex the remedy for any problem has
been "to reorganize" — often without organization stud-
ies. Until recently, the political command simply
did not see any need to do anything about organiza-
tion, to think about organization, much less to think

262

through to a new structure for science, technology,
and production. In general, old managerial forms
were mechanically carried over to new organizational
structures without eliminating their deficiencies or
examining their suitability under changed conditions
and goals. To perform these tasks today, Boris Mil-
ner, the foremost Soviet authority on industrial de-
sign, insists, "trained organization specialists are
needed, not reorganizers who are able only by intui-
tion to put together new combinations from old admin-
istrative elements." Indicating there is political
support for this view, Brezhnev has also emphasized
the need for a more scientific approach to organiza-
tion-building and administrative restructuring. Talk-
ing about these issues in Alma Ata in March 1974, he
said, "We must act not by eye, not by intuition but
be led by experience, experiments, and the conclu-
sions of modern management science."-5

Above all, a change of focus is called for. In the
past those who worked on problems of structural de^-
sign concentrated on current tasks. They dealt, as
Milner puts it, "in statics, not in dynamics." Struc-
tures were interpreted predominantly as variations on
a common theme, namely the division and evolution of
line and staff functions. To quote Milner, struc-
tures were regarded "as a permanent collection of
line and staff services, formed over a period of 30
years without showing any developmental tendencies
or taking into account new tasks." "The basic focus,"
he adds, "was on the differentiation and specializa-
tion of functions, not on their integration and joint
actions with respect to common goals. "32

The "new school" of organization theorists, on the
other hand, adopt a systems approach to structural
design. They see structure not as an aggregate of
universal functions carried out by separate and dis-
tinct agencies but as a means for achieving organiza-
tional goals. Goals are to be made the chief deter-
minant of organizational structure and processes by
which tasks are allocated and performance motivated,
rewarded, and controlled. As Milner says, "Thus, in
the beginning is the goal; then comes the mechanism

263

for achieving it." The emphasis in designing struc-
tures must be on flexibility rather than permanence
of relationships. "The task is to ensure dynamism,
flexibility, and adaptability in systems of manage-
ment," writes Milner. "The issue," he explains, "is
about introducing organizational structures that are
able to respond rapidly to changes in external tech-
nological and economic conditions, that can ensure
long-range planning, improvement of production organ-
ization, a rise in product quality, better ties with
consumers, study of product demand, efficient utili-
zation of resources, and the organization of effec-
tive financial and credit relations ."33 As conven-
tional organizational approaches have become ineffec-
tive in dealing with problems, the systems view has
emerged as a way of coping with complexity and change.

On another level, there is enhanced awareness of a
direct correlation between technology and structure.
Technical progress and organizational development are
seen increasingly as being interrelated and interde-
pendent. Kalita and Mantsurov, for example, observe,
"The level of organization and management of produc-
tion to a significant — if not decisive — degree now
predetermines the rates of S&T progress." They ac-
knowledge "a direct dependence between organizational
and technical factors of production, between the na-
ture of its structure and the rates of technical ad-
vance." Milner also notes that qualitative changes
in organization and management "are becoming a premise
and a result of progress in science and technology ."34

Accordingly, the adoption of a new strategy for
technological innovation and development is seen by
some to require organizational adaptation as well. As
Brezhnev observed in 1971, the new demands on organi-
zation and management "do not allow us to be satis-
fied with existing forms and methods, even where they
have served us well in the past." P. M. Masherov, a
candidate member of the Politburo, told the Party
congress in 1971, "Still not all of our executives
fully understand that it is impossible to 'squeeze'
the revolution in science and technology into the
framework of old methods and organizational forms of

264

work." Two specialists, on innovation, P. Danilovtsev
and Yu. Kanygin, similarly insist, "To attempt to put
the research-production cycle into traditional forms
of organization and management is like trying to use
a steam-boiler to harness thermonuclear energy. "35
Experience has also demonstrated the difficulties of
applying new methods of planning and management, in-
cluding computer-based information and control sys-
tems, within established structures. More and more,
then, there is movement toward the view, advanced by
numerous Western writers, that "structure follows
strategy," that organizational forms, to be effec-
tive and sound, must adapt to changes in technology
strategy.

In the process of rethinking organization, some of
the deficiencies of the pattern and consequences of
structural evolution in R&D have become steadily ap-
parent. As often happens with rapid growth, the bur-
geoning development of the Soviet S&T establishment,
especially since the mid-1950s, has been a disorgan-
izing and disorganized process. Little thought or
analysis was given to organizational design and de-
velopment. There was no conceptualization, measure-
ment, or assessment of organizational effectiveness.
Organizations simply "evolved," largely in an un-
planned and unsystematic fashion. Today, as a result,
even the names of some facilities bear little resem-
blance to their actual activity. Speaking about this
pattern of growth, Mikulinsky writes,

Old institutes gradually tend to spawn a great
many diverse extensions and superstructures,
swelling out into an agglomeration of numerous
laboratories, departments, sectors and groups
which frequently have no more than administra-
tive or organizational links. As they grow,
such institutes cease to be manageable, lose
their character of being a definite creative
collective, and this has a negative effect on
the solution of major problems calling for
concentrated efforts. 3°

265

Sheinin also notes that many R&D institutions "con-
tinue to exist largely by inertia, become preoccupied
with far fetched or secondary problems, and avoid new
directions and new questions, becoming ends in them-
selves. "37

Two major organizational deficiencies in science
and technology come in for particular criticism. The
first is the relative rigidity and bureaucratic char-
acter of R&D institutions. E. I. Gavrilov faults
these organizations for "their slow response to chang-
ing goals, tasks, and projects, their incapacity for
extensive integration and cooperation, and their in-
effectiveness in resolving scientific and production
tasks." V. N. Arkhangelsky sees the main weaknesses
of R&D structures as their "static quality" and "or-
ganizational exclusiveness." In the same vein, Mi-
kulinsky writes, "New lines of research find it ever
harder to find their place within the framework of
established collectives and crystallized organiza-
tional forms." Gvishiani, too, speaks about science
having "a surplus of stability and in some instances
even of conservatism." One of the main demands be-
ing made on science, he stresses, "is that it should
become much more flexible and mobile and capable of
much easier and faster reorganization and even of to-
tal restructuring, when the need arises. "3°

At the same time, organizational change is recog-
nized as being a formidable task. Gvishiani himself
admits, "It is extremely hard to recast the structure
of a scientific establishment that has taken decades
to shape." In practice, it is easier to create a new
R&D facility than to transform an old one. This op-
tion, however, which has been frequently used, is
less viable today given the constraints on resources
and need for intensive development of both science
and industry. Moreover, restructuring involves build-
ing organizations that are not only more fluid but al-
so both flexible and stable. Yet finding the right
blend of adaptability and stability is the "main dif-
ficulty" in the organization of Soviet S&T today,
Gvishiani emphasizes. * The deputy chairman of the
GKNT and others also acknowledge that the major prob-

266

lems in restructuring frequently revolve around the
inability and unwillingness of scientists and engi-
neers to switch from one field or project to another.
The creation of large integrated research and pro-
duction complexes requires a corresponding psycho-
logical remolding of collectives which are used to
working in isolated groups. ^0 in short, institution-
al restructuring involves considerable behavioral en-
gineering and attitudinal change. The organizational
issues, therefore, go beyond strictly structural and
technical factors, a point that some — but not all —
organizational reformers and "enthusiasts" realize.

The second major deficiency concerns the organiza-
tional dissociation of R&D participants and the se-
vere coupling problems that this creates in moving
ideas from the lab into use. The traditional ap-
proach to innovation, based upon extreme functional
specialization by institutional performers, has left
the process structurally fragmented and shapeless.
Structural barriers have been created all along the
innovation chain. In essence, the process has been
unorganized and unmanaged.

To overcome this fragmentation, special emphasis
is now being put on the need to apply a systems mod-
el of organization to innovation. Virtually every
major writer on science policy in the 1970s, in fact,
joined — if not led — the burgeoning systems movement
in the USSR today. Because it focuses attention on
interrelationships, interdependencies, and integra-
tion, the systems approach is regarded by many to be
a viable conceptual framework for analyzing and solv-
ing structural design problems. Its emphasis on
study of organization of the research-to-production
cycle as a total system is new and underscores the
emerging broader view of organizational structure as
a means of facilitating decision making, motivation,
and control. The application of a systems model
transforms the innovation process allegedly into "a
unified and self -regulating dynamic system." The re-
search cycle becomes "a continuous and goal-directed
process."^! Recent organizational policy aims, then,
at making the process both managed and manageable.

267

Practical manifestations of the systems approach
to organization are seen in the variety of integra-
ted structures and new associational forms linking
research, development, and production activities that
have arisen in recent years. Research and production
complexes have indeed become a phenomenon of the
times. Regional R&D centers, modeled somewhat after
American research and industrial parks, have sprung
up in a number of areas and join industry and educa-
tional institutions or academy institutes and exper-
imental production facilities.

Wrestling with the problems of innovation, Kremlin
authorities have become increasingly aware of the im-
portance of linkage and of the need to structure more
explicitly and effectively the vital interfaces in
the transfer process. Accordingly, linkage is a prom-
inent feature in the designing of new structures or
modification of established arrangements. The search
for more effective and flexible designs has also led
to rising interest in project and matrix forms of or-
ganization and management. Indeed, the matrix model
is seen by some analysts to be the ideal structure
for R&D in the future. It is regarded as an effec-
tive way of institutionalizing flexibility and sta-
bility. 42 At present, however, matrix organization
is still used on a limited and experimental basis in
civilian R&D. Nonetheless, current organizational
thought, at least in some prominent Soviet circles,
points to an expansion of the matrix and of other
shapes for R&D management in the 1980s.

In sum, a new and more sophisticated style of
thinking about organization and the structural re-
quirements of technical progress has recently devel-
oped in the USSR. New attitudes and approaches are
emerging as the leadership begins to address some of
the fundamental structural problems impeding S&T per-
formance and capacity. Both foreign and domestic ex-
perience have convinced some segments of the ruling
elite that "the management structure of economic or-
ganizations should be designed no less carefully than
new technology," according to Georgy Arbatov, Direc-
tor of the Institute for the Study of the USA and Can-

268

ada.^3 Monolithic organizational perspectives are
gradually giving way to multi-institutional views
as the Kremlin seeks to cope more effectively with
advancing technology and complexity.

To be sure, practice lags behind conceptual ad-
vances. V. A. Trapeznikov of the GKNT admits that
in structuring and managing large complexes and or-
ganizational S&T systems "we are essentially only be-
ginning work."^ Organizational experimentation and
structural change have been limited. Nonetheless,
the leadership appears increasingly serious about
helping make organization itself a positive force for,
rather than impediment to, innovation. Given the
heavy emphasis on organizational issues and approach-
es, in fact, the key to innovation seems, at times,
to be simply "management by structure." In any case,
it is important to note that the basic building
blocks are beginning to assume new shapes. Integrat-
ed research and production complexes are coming into
being. Organizational arrangements are being repat-
terned and authority lines recycled. The Soviet S&T
establishment is in motion and in transition.

IMPROVING PLANNING AND RESOURCE ALLOCATION

There is also enhanced awareness of the complexity
of planning and stimulating S&T progress. Some of
the shortcomings and disincentives of the planning
system with respect to innovation have become steadi-
ly apparent, as has also the need for greater initia-
tive and user-stimulated innovation in R&D. "We can-
not divide the 'plan-stimulation1 formula into two
parts and subordinate one to the other," some spe-
cialists argue. "We all realize," they add, "that it
is impossible to solve the whole problem by moving
just one lever alone. "45 Thus considerable attention
was given in the last decade to strengthening the
role of "economic mechanisms" (e.g., prices, credit,
profitability) and of various incentive schemes in
promoting scientific research, development, and de-
livery .

269

The dominant approach to S&T policy, however, re-
mains fundamentally management-centered rather than
entrepreneur- or market-centered. V. M. Ivanchenko,
an official of the USSR Gosplan, expresses the pre-
vailing view: "It is impossible to transfer problems
pertaining to the acceleration of S&T progress to
economic levers and stimuli alone." The predilection
for central planning persists. The commitment to
central planning remains firm. Indeed, it is said,
"The management of technical progress needs to be
centralized more than any other area of economic man-
agement." The national economic plan proper, conclud-
ed the recent round table of experts, "must be the
main link that we must grip in order to pull the en-
tire research-to-production chain. "^6

In the sphere of S&T planning, attention has fo-
cused largely on two needs: long-range forecasting
and planning geared to the ultimate utilization of
research results; and more integrated program-type
planning and effective project control. To meet the
first need, Soviet authorities have pressed the cam-
paign to extend the horizons of planning beyond the
prevailing short-term incremental mold in order to
accommodate the kind of decision making and long lead
times inherent in the development of science and tech-
nology. For all practical purposes, Soviet economic
planning is an annual matter. The dominant tendency
is to plan "from the achieved level." The expansion
of existing production patterns prevails over the
development and introduction of new products and pro-
cesses based upon S&T. As a result the plan for S&T
has remained largely "an appendage of the general
economic plan, an independent chapter insufficiently
integrated with the whole. "^7

Significantly, in 1971 Brezhnev stressed that a
new approach was needed to make the macroeconomic
plan a powerful lever of S&T progress, to ensure the
rational management of both economic growth and new
technology. He called for the formulation of a com-
prehensive program for the development of science and
technology that could then be used as the basis upon
which to build a 15 year general economic development

270

plan. Such a program, he told the Party congress
five years later, "provides points of reference and
orientation without knowledge of which it is impos-
sible to manage the economy successfully."^

Since 1973, in fact, work on such a general devel-
opment plan that would extend to 1990 has been under-
way. Given the tremendous and recurring difficulties
the leaders have in trying to devise even feasible
five year plans, however, it is no wonder that such
long-range planning has encountered stiff resistance
and serious methodological obstacles. The Academy
and the GKNT completed a partial draft of a "Compre-
hensive Program of S&T Progress and Its Social and
Economic Consequences for 1976-1990" by the fall of
1975. Indicating that this effort did not yet meet
with full approval, the Party Congress in February
1976 instructed the Academy and the State Committee
"to continue" their work on this subject and "to see
to it" that the forecasts "are better grounded. "^9
Preparation of a general 15 year development plan
for the country continues to encounter delays and
difficulties.

Though we still know very little about the details
of the Comprehensive Program for S&T, it is possible
to glimpse from available information at least a few
of the central concerns surrounding this endeavor. In
general, the more than 150 forecasts prepared for var-
ious fields of science and technology before drawing
up the Comprehensive Program were only partial fore-
casts. They focused on the development and production
of only a few select products and processes. In ad-
dition, each forecast was developed predominantly on
a branch basis, separate from the rest in material
and labor resources. The lack of a "systems approach"
to planning and resource allocation admittedly dimin-
ishes the value of the forecasts. 50

Particularly significant, the major projects in-
cluded in the Comprehensive Program are based only
upon S&T achievements that have already found prac-
tical application. "This reduces, of course, the

271

possibilities for technical progress posed in the
Comprehensive Program but, at the same time, makes
the general targets and indicators realistic and re-
liable," claims a study produced by the Higher Party
School under the CPSU Central Committee.51 Nonethe-
less, there are some, like A. S. Gusarov of the Acad-
emy's Institute of Economics, who disagrees with this
approach to planning, uncertainty, and risk. He em-
phasized at the 1975 round table, "After all, we must
be concerned not only with mastering the experience
that has been amassed in the course of S&T progress,
but also with mastering the ongoing revolution in
science and technology." Gusarov and others apparent-
ly fear that this conservative approach to building
the future entirely on the accomplishments of today,
no matter how high, will only lead to "planned obso-
lescence." As a recent major Soviet work on science
policy put it, such planning amounts essentially to
"programming backwardness, not progress."-^ it also
does not constitute a viable strategy for closing the
technology gap with the West. On the contrary, it
carries the possible danger that the USSR will fall
even further behind. As Gusarov observes, "After all,
it is possible to lag even while moving forward."5-^

To meet the second need, continuing emphasis has
been placed on broadening the application of a "pro-
grammed-goals approach" to planning and management.
A kind of "programmitis" has gripped the Kremlin as
many have fastened on this management-integrative
tool with high hopes of solving the mounting problems
of complexity and change. Its use is being urged for
major construction projects, like the territorial-
production complexes being built in Siberia, Central
Asia, and the Far East, as well as for large-scale
R&D programs. Calling for comprehensive programs
centering on key scientific, engineering, economic,
and social problems, Premier Kosygin at the 1976 Par-
ty congress singled out as priority tasks the devel-
opment of the nuclear power industry and the mechan-
ization of manual and heavy physical labor. A. P.
Aleksandrov, President of the Academy of Sciences,
suggested that the modernization of agriculture and

272

development of computer technology be raised to this
special national program status. Brezhnev, on the
other hand, stressed to the congress the importance
of formulating comprehensive programs for the devel-
opment of the fuel and power complex, metallurgy, and
the leading branches of machine building.

As regards science policy specifically, movement
towards programmed-goals planning is most evident in
the switch from "coordination plans" to "integrated
programs" for high priority S&T problems. The number
of basic problems has also been reduced to around 200.
Much more than before, the accent is on the actual in-
troduction of R&D results into the economy, on inte-
grating science, technology, and production. This
follows Brezhnev's own stress at the 1976 congress
on the need to focus planning and management more on
"end results." "This approach becomes especially ur-
gent," he explained, "as the economy grows and be-
comes more complex, when these end results come to
depend more and more on a multitude of intermediate
units, on an intricate system of intrabranch and in-
terbranch ties." "In these conditions," Brezhnev in-
sisted, "It is easy to overlook the most important
thing — the end results."5^ Scientific R&D has in
particular frequently been caught in "the activity
trap," when activities become an end in themselves
and their end results are lost to sight. As we have
noted, even the coordination plans for priority S&T
problems have tended to end with the experimental de-
sign and testing stage and, in exceptional cases,
with the production of prototypes. For all practical
purposes, the planning process has stopped short of
series production. Scientific R&D thus has failed
to produce substantial practical results, to follow
through to industrial assimilation. Suffice it to
note that another important aim of the new integrated
S&T programs is to facilitate more effective coordi-
nation of R&D plans with investment plans and with
the allocation of material and technical resources.
Thus, the change in planning involves more detailed
control and managerial surveillance, not just the in-
troduction of R&D results.

273

Underlying this heavy accent on the systems ap-
proach to planning is the need to deal more effec-
tively with major interbranch problems that cut
across ministerial lines. Brezhnev particularly
complained to the 1976 congress about too many
"nursemaids," about the fragmentation of decision
making and administration, leading to unwarranted
cost overruns and protracted delays. "What is re-
quired here," he told the congress, "are integrated
and centralized programs embracing all stages of
work, from project design to practical implementa-
tion." Lending his support to the systems movement,
the General Secretary charged that "the question of
improving the methods of solving major interbranch
and territorial problems of state importance cannot
be put off."-* M. P. Ring, a prominent science pol-
icy expert, also emphasizes that the Soviet govern-
ment cannot continue to solve major complex S&T prob-
lems incrementally "by pieces," and by means of ter-
ritorial and branch planning alone. Such a policy
leads to "slow, incomplete, and insufficient solu-
tions."56

It is important to mention again that, despite the
long tradition of central economic planning, Soviet
authorities have lacked until relatively recently the
necessary organization, techniques, authority, and
experience to plan and manage R&D on a comprehensive
level. This is particularly true for the civilian
sector with the exception of a few crash development
and high priority programs, like chemical technology
or atomic energy. Planning of R&D has been — and
still predominantly is — conducted on an institutional
basis. Given the extreme functional specialization
of institutional performers and the structural frag-
mentation of the innovation process, it has not been
possible to plan and manage projects within the
framework of one or two organizations. A major aim
of the drive to create large research and production
complexes is to build an organizational basis for
broader program planning. Such structures permit the
development and use of more sophisticated techniques
of systems management and project control.

274

Thus, systems planning and programming is seen by
many to offer a remedy — if not a panacea — by which to
overcome existing deficiencies. But experience re-
mains limited in this area. As Academician T. S. Kha-
chaturov, editor-in-chief of the main Soviet economic
journal, cautioned the 1975 round table on S&T prog-
ress, "This is indeed an enticing prospect, but to
what degree has the ground been laid for program-in-
tegrated planning?" Indeed he reminded them, "It is
appropriate to remember that work is only now begin-
ning on questions pertaining to planning based on com-
plexes and programs."" There are still many unre-
solved issues not only about programming per se but
also about how to fit programming techniques into the
general system of Soviet planning. The issues here
are far from purely methodological.

RAISING MANAGEMENT EFFECTIVENESS

Problems of choice, priority, and policy are,
above all, management problems. Indeed it is possi-
ble to say that management has emerged as the "cen-
tral issue" in Soviet science policy and development
strategy today. A. V. Sobrovin of Moscow University
expresses the prevailing official view: "The problem
of technical progress is first and foremost a ques-
tion of management ."58 in june 1970 Brezhnev ob-
served, "The solution to many of our economic prob-
lems should now be sought at the junctures between
progress in science and technology and progress in
management . "59 Gvishiani writes similarly:

It is no exaggeration to say that the pace
of our advance hinges on organization and
capabilities in the system of management.
Fusion of the latest achievements in science
and technology with the most up-to-date
achievements in organization and management
is an imperative of the contemporary STR.60

275

Growing appreciation of the critical role of man-
agement, in turn, has brought enhanced awareness of
the need for more effective R&D administration. So-
brovin says frankly, "Let us build a modern system of
management of technical progress. If we do not do
this, we will accomplish nothing. "°1 Stating what
has since become a slogan of the times, Brezhnev de-
clared in June 1970 that "the science of victory in
building communism is in essence the science of man-
agement." The linchpins of his grand strategy have
become the "management of science" and the "science
of management . "

A critical "management gap" therefore is an inte-
gral part of the perceived "technology gap" in the
USSR. Soviet authorities have come to recognize more
and more that the existing technology of management
is increasingly inadequate in coping with modern R&D
problems. Innovations in planning, organizing, and
controlling activities have lagged along with advanc-
es in technological hardware. There exists a new
level of awareness of the need to develop and to ap-
ply modern dec is ion -making techniques and management
attitudes toward S&T policy. Indeed underlying these
concerns, it seems, is the idea that perhaps the fast-
est and most effective means of overcoming Russia's
technological backwardness in modern hardware is
through a great leap forward in "software" and man-
agement know-how .

Again, as in organization and planning, the major
problems in management lie in the fragmentation of
R&D decision making and administration. This results
in poor direction and integration of effort — the
heart of management functions. Integrative capabil-
ities are, moreover, becoming increasingly important
in S&T policy. "The problem of ensuring continuity
of the process at every stage of R&D, including the
introduction of results into mass production," writes
Gvishiani, "is now being brought to the fore as the
most complex organizational task. It is absolutely ob-
vious that this process requires integrated manage-
ment." Professor G. Kh. Popov, Dean of the Economics

276

Faculty at Moscow University, also notes, "Today vir-
tually all questions of any importance — and above all
the key problems of S&T progress — have become inter-
branch in nature." "This is why," he explains, "im-
provement of the mechanism of interbranch coordina-
tion is one of the core problems of management." As
regards this problem, Politburo member M. S. Solomen-
tsev, who is also Premier of the Russian Republic,
acknowledges flatly, "There is nothing of greater ur-
gency.""-^ Indeed, the administrative machinery en-
counters its greatest challenges in dealing with com-
plex S&T problems. At a time when the importance of
this class of management problems is rising, the de-
ficiencies of the existing system of coordination are
becoming all the more apparent.

Official concern with surmounting these shortcom-
ings provides, in fact, the impetus behind the grow-
ing systems movement in the Soviet Union today. Sys-
tems technology is fast becoming the final word in
organization, planning, and management as the leader-
ship seeks more effective methods of integration and
control.

Taken together, developments in the areas of or-
ganization, planning, and management indicate, to a
large extent, the efforts being made to bring space-
age management perspective and technique to the Krem-
lin. The current emphasis on setting objectives, de-
veloping action plans, determining the means to ac-
complish them, and appraising performance on the ba-
sis of results is the essence of modern management.
The "programmed-goals approach" is basically Soviet-
style "management by objectives," "results management,"
and "systems planning, programming, and budgeting," to
use equivalent Western terms. Much like leaders of
complex organizations the world over today, in gov-
ernment and business, Brezhnev and company are at-
tempting to use these tools to improve managerial
performance and effectiveness as well as to ensure
Party control.

In the organization of management, two problems in
particular are being singled out. The first is the

277

need to separate strategic and coordinating functions
from operating management and control. The failure of
existing management structures to incorporate and
maintain this division of tasks has caused them "to
freeze the development of technology and the effi-
ciency of production," writes Milner. In practice,
both strategic and operational functions are concen-
trated at the highest levels of management. Conse-
quently, the command channels become overloaded as
problems are constantly referred upward. Top execu-
tives become absorbed in current operations and di-
verted from strategic concerns.

Second, there is need to formalize and expand hor-
izontal patterns of management as well as to combine
vertical and horizontal channels of administration.
Integration can take place only at the apex of the
organizational pyramid. Thus, top management becomes
heavily involved in securing horizontal joint actions
and coordinating goal achievement by various func-
tional units at lower levels. Again the result is
the overload described above and the failure of or-
ganizational leaders to conduct strategic planning
and decision making for the future. At the same time,
the number of complex problems demanding team work
and joint effort is growing daily. Numerous attempts
have been made at plants and associations to create
special bodies responsible for coordinating and har-
monizing lateral ties at all levels of management.
However, they have proven to be ineffective, Milner
points out, "because they try basically to adapt the
line and staff structure to solve tasks for which it
is not suitable." Such problems can be solved most
effectively, he adds, "within the framework of a spe-
cial structure, one that cooperates with a line and
staff structure, supplements it but is not identical
to it. "65

Basically, the Soviet structural response to these
needs has followed closely the pattern of organiza-
tional and managerial adaptation in the United States.
During the 1960s many American business firms found
that well-known and well-tested structural designs

278

and management shapes were inadequate in coping with
complex problems of advancing technology. They faced
many of the same pressures and design problems that
preoccupy the Kremlin today. Similarly, interest in
the design of strategic planning systems mushroomed
as ways were sought to free top executives from oper-
ational worries. Differentiation and integration
concepts were applied to structural design to achieve
greater organizational flexibility and management ef-
fectiveness. Additional managerial roles were creat-
ed to provide horizontal coordination across function-
al lines and vertical flows of authority. Among the
most important structural innovations to emerge out
of the 1960s were project management and matrix or-
ganization.

Significantly, these same two concepts lay at the
basis of Soviet structural refinements and managerial
reforms in the 1970s. According to Milner, they pro-
vide for "a flexible and dynamic system of interfunc-
tional coordination and subordination of diverse ef-
forts of individual links for accomplishing set ob-
jectives.""" "Project teams overcome intraorganiza-
tional barriers and therefore avoid the basic contra-
dictions of a functional structure," writes Taksir."'
N. E. Drogichinsky notes, "In the matrix structure
are optimally combined vertical and horizontal flows
of leadership, the management of current production
and scientific research, the development of new tech-
nology and retooling for manufacturing new products
without violating the rhythm of production. ""° The
main advantage of matrix organization, Gavrilov ex-
plains, is that it makes possible the transfer of
operational management to lower levels and thus per-
mits top management to step out of day-to-day deci-
sion making and to concentrate on strategy develop-
ment .69

Accordingly, the concepts of project and matrix
management are beginning to find application in the
development and introduction of new technology in the
civilian sector. Science-production associations in
particular have become crucibles for experimentation

279

with these new management modes. These design con-
cepts are also being applied at higher levels of the
administrative structure as part of the process of
ministerial restructuring. The radio, chemical, and
electrical engineering industries are on the frontier
of experimentation in this area.

Nonetheless, it is difficult at present to assess
the impact and future of these changes. Detailed in-
formation is lacking about the actual practice of pro-
ject and matrix management. Evidence suggests, how-
ever, that these organizational innovations are not
easily or rapidly assimilated. They challenge the
way organizations are structured and the way people
are managed.70 The conversion to matrix management
and more sophisticated administrative arrangements
will necessarily be slow and difficult, as has also
been the transition to new management forms in the
United States.

Finally, it is important to mention the growing
recognition in the Soviet Union of the need to make
R&D management a distinct and separate form of man-
agerial action and specialization. In the past inno-
vation was not made a managerial responsibility. Both
the researcher and manager have been characterized
by non-innovative role definitions. The introduction
of new technology fell entirely outside the normal
duties of enterprise executives and workers. Manage-
ment was geared to repetitive and unchanging produc-
tion operations.71 To accommodate a more rapid rate
of technological growth, however, Prof. Popov and
others argue that a new kind of management is needed
that is oriented to innovation. The management of
R&D must be developed and included as an integral
part of the system of managing the enterprise, the
branch, and the economy as a whole. In addition,
this new managerial function must be put on a par
with the management of production, of finance, and
of supply.7 More and more, then, Soviet specialists
appear to be coming around to the view shared by nu-
merous American analysts that innovation cannot be a
subordinate and part-time task. The problems are too
obstinate to yield to only occasional attention and
half-hearted action.

280

STRENGTHENING THE BONDS OF MOTIVATION

The motivational and collaborative issues left un-
attended by previous approaches to innovation are al-
so receiving greater attention today. On one level,
efforts have been made to strengthen the role of eco-
nomic stimuli. Some specialists feel, in fact, that
too much emphasis is being placed on this direction.
According to Gusarov, "Essentially the system of stim-
ulation has been reduced to a system of material in-
centives, and this is not correct." Others argue,
"We must not fear the creation of large incentive
funds at enterprises producing high quality products:
they pay for themselves entirely by eliminating los-
ses due to low quality production." New incentive
funds have been established at R&D organizations, and
steps have been taken to tie the funding and awarding
of bonuses more closely to the return that R&D re-
sults yield the consumer and the economy. A number
of experiments are also underway that seek to relate
salary levels to productivity and to the results of
work of research personnel.

In general, though, there remain a number of trou-
blesome and unresolved issues surrounding this whole
question. Yu . V. Borozdin notes, "The fact of the
matter is that to date there is still a certain gap
between the system of planning, the system of incen-
tives, and the system of price formation." The award-
ing of incentives is based upon faulty and obsolete
(1968) methods of pricing new products and of equally
ineffective and outdated (1961) methods of determin-
ing economic return on new technology. Two systems of
incentives still exist at production enterprises: one
is geared to the fulfillment of basic economic activ-
ity and the other to the application of new technol-
ogy. Not only do the two frequently contradict each
other, but the latter system, according to M. I. Vol-
kov, "is easily overshadowed" by the former. Lev
Gatovsky similarly writes that the stimuli for new
technology cannot serve as a real "counterweight" to
the rewards for basic production. "Methods of cost

281

accounting, the evaluation of economic activity, and
the system of material incentives are too little ori-
ented toward national economic effectiveness based on
S&T progress," he affirms. 7^ Despite the strong ac-
cent since the late 1960s on the importance of accel-
erating innovation, in fact, the relative share of in-
centive funds for applying new technology compared to
the bonuses for fulfilling basic production targets
has actually declined over the years. Writing in
the Academy's economic journal in May 1977, Gatovsky
asserts that the innovating enterprise still finds
that it does not occupy an advantageous and privileged
position. On the contrary, this is still held by en-
terprises producing old and obsolete technology .76

In addition, the development of a unified incen-
tive structure has been a special problem at all lev-
els of the administrative hierarchy. Just as in R&D
planning and management generally, divided authority
and fragmented administration have been the rule in
this sphere as well. Only recently have a few min-
istries switched to a system of unified funds for
planning and stimulating the research-to-production
process within the branch as a whole. Only in 1976
were guidelines laid down for the science-production
associations on the formation and utilization of uni-
fied incentive funds. Previously, the central man-
agement or head organization of the NPO lacked au-
thority to redistribute assets, investments, and
funds of the constituent units. Each subdivision
formed and spent its own fund for material incen-
tives, and the NPO did not have any right to these
funds. As a result top management could not utilize
these resources or part of them as an economic in-
strument. The absence of unified funds and uniform
rates for bonuses has prevented NPOs from using mon-
etary incentives to encourage association members to
pull in the same direction. A similar problem exists
with respect to the use of incentives across minis-
terial lines to stimulate interbranch R&D. Scientific
R&D organizations receive deductions for their mater-
ial incentives fund from profits of individual enter-
prises only in their own branch. This dampens their

282

interest in doing work of an interbranch character.
At present there are no procedures that permit an
easy transfer of bonus and wage funds, capital in-
vestments, and material resources from one branch
to another to stimulate organizations, regardless
of their departmental affiliation. 77

On another level, strong emphasis has been placed
on strengthening motivational bonds through the cre-
ation of a unifying goals framework. This tendency
to view questions pertaining to incentives through
the prism of the plan is in keeping with the basic
centralized approach to S&T policy. Because the re-
search-to-production process has basically lacked an
integrating goals structure, the focus has not been
on final results and overall integration but on
separate functions and individual work efforts per-
formed in isolation from one another. Coupling has
been loose and disjointed. Individual and institu-
tional participants are not fully aware that they
are involved in a connected process. The whole ac-
tivity chain moves through different links without
the integrating force of common purpose and sense of
teamwork.

Through more explicit use of a goals-oriented sci-
ence policy and purposive technological innovation,
the leadership is trying to build a more effective
framework for cooperation and interorganizational
collaboration. The accent on objectives and end re-
sults in programmed-goals planning and systems man-
agement approaches currently in vogue is designed to
help build commitment and common purpose that can
fuse structure and people in joint action. Through
research and production complexes and associations
the authorities hope to reshape the attitudes of R&D
personnel and to create a coincidence of interest
among all participants in the smooth and rapid trans-
fer of technology. Instead of being guided by its
own special interests and parochial views, each unit
is to be motivated by common objectives, by "only one
concept: ours." The new complexes are seen as means
by which to transform "awkward external cooperation

283

into harmonious intrafirm cooperation. "78 Such inte-
grating structures are expected to build a more ap-
propriate climate for innovation and to help get
needed team play. Indeed, the Russian term most fre-
quently used to describe these complexes and associa-
tions— obedineniye — comes from the verb "to unite" or
"to join." It captures the explicit design emphasis
on integration and cooperation.

To be sure, efforts are being made on a variety
of fronts to strengthen motivational bonds all along
the research-to-production cycle. Current approaches
focus almost entirely on the creation of positive in-
centives to promote and reward innovation. Little
attention, much less emphasis, is being given to the
creation and use of negative incentives or sanctions
that punish non-innovative behavior, such as are pro-
vided by a competitive market economy. In general,
though, motivational bonds are difficult to assess
until there is greater knowledge and understanding
of the nature of anti-innovation attitudes and re-
sistance to new technology in the Soviet Union. In-
deed, this point was made by Sobrovin at the 1975 na-
tional round table on S&T progress: "We still do not
know the reasons for the slow introduction of S&T ad-
vances by enterprises, and hence we do not know the
objective base for searching for new forms and meth-
ods of stimulation."'"

SCIENCE POLICY REFORMS:
A BALANCE SHEET

Following Soviet S&T policies over the last decade,
one is struck by a number of features. First, the
growing sophistication of research and analysis in
this area is amply evident. Important steps are be-
ing taken to advance understanding as a first step
toward improving the practice of scientific R&D. The
proliferation of "research on research" has led to
greater awareness of the multiplicity of factors in-

284

volved in moving ideas from the laboratory into use,
along with greater appreciation of the importance of
effective coupling throughout the process. Nonethe-
less, understanding of the innovation cycle remains
incomplete. Many questions still lack adequate an-
swers; some important issues have not yet even been
raised in the literature.

At the same time, practice continues to lag appre-
ciably behind perception. Just as in modern technol-
ogical hardware, so also in modern software the im-
plementation and diffusion of innovations in R&D
planning and management remains a critical problem.
Indeed, the ongoing science policy debate is replete
with complaints that progress in introducing reforms
is slow. Brezhnev observed at the 1976 congress, "The
improvement of planning, the restructuring of the
economic mechanism, and the policy of intensifying
production proceeded slower than planned." He par-
ticularly lamented, "Despite the fact that this ques-
tion was raised repeatedly and insistently, the ap-
plication of S&T achievements is still a bottleneck
in many branches. "°^ Even more outspoken is L. A.
Vaag of the State Committee for Science and Technol-
ogy, who told the national round table on S&T prog-
ress in the fall of 1975, "Five years have passed and
there have been no major changes. "°1

Though the Kremlin's new strategy for science and
technology stresses the need for a total systems out-
look and approach to remedy the problems of incom-
plete planning and disjointed administration of R&D,
reforms themselves have been adopted in a piecemeal,
experimental, and incremental fashion. Despite some
steady gains made in the 1970s, a great gap persists
between the aspirations of Soviet authorities for
comprehensive and coherent S&T policies and their
abilities to implement these wishes. In short, the
Kremlin's reach still exceeds its grasp in this pol-
icy sphere.

The two systems for guiding S&T progress still
prevail, and opinions continue to differ over how to

285

improve and how to integrate them. The basic system
of economic planning and management is oriented to-
ward the expansion of production and today's technol-
ogy, while the supplementary system is concerned with
the planning and management of R&D toward the tech-
nology of tomorrow. For the most part, the target of
attention and action has been the supplementary sys-
tem. This prompts Vaag to exclaim, "We must think of
improvements in the basic system and must not confine
ourselves to improving supplementary systems for the
stimulation of S&T progress."82

At issue is largely the role and future of the
supplementary system. On one side are those who ques-
tion the need to improve and to preserve this second-
ary line of influence. For them the central issue is
making the basic system work for science and technol-
ogy. If the economy as a whole is not altered to in-
spire and promote technological innovation, then im-
provements in the supplementary system, no matter
what, will be of no avail. If the fundamental work-
ings of the economy can be so modified, then a sup-
plementary set of S&T mechanisms will be unnecessary.
On the other side, there are some who focus almost
exclusively on improving the latter machinery. They
tend to inflate its role in and potential for accel-
erating S&T progress while downplaying the need for
general system reorientation and change.

A middle position on this issue is held by Profes-
sor Popov of Moscow University. His views also prob-
ably represent the majority opinion among the Soviet
ruling group at this time. Given the complexity of
science and technology under modern conditions, Popov
contends that it is necessary to retain, even in the
future, two channels of influence. In describing the
specific task of the supplementary system, he draws
an analogy with modern aviation. Just as some ad-
vanced aircraft require an initial booster engine in
order to accelerate to a certain level before the
main engines cut in and take over flight control, so
a modern economy needs a supplementary booster sup-
port system for the development and acceleration of

286

science and technology. This secondary system of spe-
cial mechanisms for R&D planning and management can
fulfill its role only when it is closely integrated
with and subordinated to the basic links of economic
management. "It is impossible for this supplementary
system alone to solve all the problems of managing
S&T progress," Popov emphasizes. 83

While everyone generally agrees that both the ba-
sic system and the supplementary system need to be
improved, there is considerable dispute about what to
improve and how. According to Popov, it is possible
to identify three main schools of reform. One group
focuses on improvements in planning, the search for
better indicators, more sophisticated analytical tech-
niques, etc. A second favors structural approaches
and organizational solutions. A third school empha-
sizes the importance of improved economic mechanisms,
such as more effective material incentives, better
pricing policies, integrated financing, etc. The
"best" policy, in Popov's opinion, is to pursue im-
provements along all three avenues, to unite all links
of the supplementary system, and to integrate this
system with the basic economic mechanism. Indeed,
this multi-dimensional approach has been generally
the path of reform in recent years.

On a broader level, developments in the 1970s con-
firm that in the Soviet Union, as elsewhere, the for-
mulation and implementation of science policies de-
pend not only on their substantive effectiveness but
on their political feasibility as well. Suffice it
to say that substantial disagreement persists within
the leadership about the intensity of the "technolog-
ical imperative." Opinions differ over the urgency
of making the transition to more intensive growth in
general and more rapid technological advance in par-
ticular. Political differences and conflict among
the major elite groups constrain action in this pol-
icy sphere. Indeed it is politics that accounts
largely for the basic discrepancy between the es-
poused strategy for S&T with its emphasis on the need
for a systems perspective and approach to problem-

287

solving and the tactics of implementation which rec-
ognize the need for a cautious, experimental, and in-
cremental mode of reform.

At the same time, it is inaccurate to attribute
the slow pace of science policy reform simply or sole-
ly to bureaucratic resistance and political conser-
vatism, The responses of Soviet leaders to the man-
ifold problems at hand appear to be based on a more
complex calculus of decision. Not only do they rec-
ognize some of the fundamental — and not just politi-
cal— constraints at work in the Soviet system. They
also are more aware of the complexities of modern
science, technology, and development. To be sure,
some still cling to the hope of simplistic solutions.
But solutions to complex problems are themselves usu-
ally complex. While this is not always understood,
some Soviet specialists and political leaders are
fully aware of the difficulties of effecting organi-
zational and behavioral change. Milner himself ar-
ticulates well the basic dilemma that confronts So-
viet policy makers in science and technology as the
USSR moves into the 1980s. There is no doubt, he
says, that modern systems approaches and more sophis-
ticated techniques make R&D planning and management
more difficult. They bring it "into a new class, in-
to a new situation." "But it is not possible by any
other way," he emphasizes, "to solve the new and com-
plex problems of development of the national economy,
which have no precedent in our past experience."8^
Perhaps the greatest stride in contemporary Soviet
S&T policy has been the discovery that there are no
simple or final answers to the problems of advancing
technology and change.

288

FOOTNOTES

1. See Andrei Sakharov, Roy Medvedev, and V. F.
Turchin, "Letter of Appeal of Soviet Scientists to
Party and Government Leaders of the USSR," March 19,
1970, reprinted in Survey, No. 76 (Summer 1970), pp.
161-170.

2. XXIV S"yezd KPSS: Stenograf icheskii otchet
(Moscow: Politizdat, 1971), I, p. 82 and XXV S"yezd
KPSS: Stenograf icheskii otchet (Moscow: Politizdat,
1976), II, p. 237.

3. L. I. Brezhnev, Ob osnovnykh voprosakh ekonomi-
cheskoy politiki KPSS na sovremennom etape: Rechi i
doklady (Moscow: Politizdat, 1975), I, p. 418; XXIV
S"yezd KPSS, I, p. 80; XXV S"yezd KPSS, II, p. 24.

4. XXV S"yezd KPSS, I, p. 73.

5. V. A. Trapeznikov, "Upravleniye naukoy kak or-
ganizatsionnoy sistemoy," in Gvishiani et al, eds.,
Osnovnyye printsipy i obshchiye problemy upravleniya
naukoy (Moscow: Nauka, 1973), p. 39; Gvishiani, "The
Scientific and Technological Revolution and Scientif-
ic Problems," Social Sciences, I (1972), p. 49; Vla-
dislav Kelle and Semyon Mikulinsky, "Sociology of
Science," ibid., 3 (1977), p. 86.

6. Gvishiani, "The Scientific and Technological
Revolution and Scientific Problems," p. 48; Gennady
M. Dobrov, "Science Policy and Assessment in the So-
viet Union," International Social Science Journal,
XXV, 3 (1973), p. 322.

7. Ibid., p. 318.

8. Quoted in L. V. Golovanov, "Sistema upravleni-
ya naukoy v SSSR i voprosy ee sovershenstvovaniya,"
in Nauchnoye upravleniye obshchestvom (Moscow: Mysl1,
19-69), III, p. 35.

289

9. XXIV S"yezd KPSS, I, p. 80.

10. See K. Yefimov, "Nauchno-tekhnicheskiy progress:
organizatsiya i planirovaniye," Voprosy ekonomiki, 12
(1974), pp. 22-23; A. A. Podoprigora, Pravovyye vopro-
sy sozdaniya i vnedreniya novoy tekhniki (Kiev, 1975),
pp. 14-32; 0. I. Volkov, Planovoye upravleniye nauchno-
tekhnicheskim progressom (Moscow: Nauka, 1975), pp. 12-
16; V. D. Volkova, Sovershenstvovaniye metodologii
planirovaniya nauchno-tekhnicheskogo progressa v uslo-
viyakh razvitogo sotsialisticheskogo obshchestva
(Sverdlovsk, 1975), pp. 6-9; V. I. Pavlyuchenko, Eko-
nomicheskiye problemy upravleniya nauchno-tekhniches-
kim progressom (Moscow: Nauka, 1973), pp. 9-37.

11. Yu. M. Sheinin, "Osnovnyye ponyatiya organiza-
tsii i upravleniya nauchnoy deyatel'nostyu," in Uprav-
leniye, planirovaniye i organizatsiya nauchnykh i
tekhnicheskikh issledovaniy (Moscow: VINITI, 1970),
II, p. 178; M. I. Piskotin, V. A. Rassudovskiy , and M.
P. Ring, eds., Organizatsionno-pravovyye voprosy ruko-
vodstva naukoy v SSSR (Moscow: Nauka, 1973), p. 31.

12. See M. A. Vilenskiy, "Nauchno-tekhnicheskiy pro-
gress kak ob"yekt planirovaniya (voprosy metodologii),"
Voprosy ekonomiki, 12 (1973), pp. 71-81; S. M. Yam-
polskiy, "Ekonomicheskiye granitsy -proizvodstva i pri-
meniye novoy tekhniki pri sotsializme," in L. M. Ga-
tovskiy, ed., Ekonomicheskiye problemy nauchno-tekhni-
cheskoy revolyutsii pri sotsializme (Moscow: Ekonomi-
ka, 1975), pp. 128-137.

13. N. P. Fedorenko, "Urgent Tasks of Economic Sci-
ence," Ekonomicheskaya gazeta, 21 (May 1976), p. 10;
Yefimov, "Nauchno-tekhnicheskiy progress: organizatsi-
ya i planirovaniye," p. 26.

14. XXIV S"yezd KPSS, I, pp. 80-81.

15. Trud, May 23, 1974. See also Yefimov, "Nauchno-
tekhnicheskiy progress: organizatsiya i planirovani-
ya," p. 24.

290

16. Volkov, Planovoye upravleniye nauchno-tekhni-
cheskim progressom, pp. 17, 19. Emphasis added.

17. Dobrov, "Science Policy and Assessment in the
Soviet Union," p. 308.

18. L. Blyakhman commented on the increasing number
of scientists in Neva, 1 (January 1973), pp. 173-181.
See also K. L. Gorfan, N. I. Komkov, and L. E. Minde-
li, Planirovaniye i upravleniye nauchnymi issledovan-
iyami (Moscow: Nauka, 1971), p. 8. For the budgetary
projections, see E. Kosov, "Ekonomicheskiye problemy
upravleniya nauchno-tekhnicheskim progressom," Ekono-
micheskiye nauki, 7 (1971), p. 51.

19. See S. Mikulinskiy, "Problema nauchnykh kadrov
v usloviyakh nauchno-tekhnicheskoy revolyutsii," Kom-
munist, 5 (1973), pp. 76-88; Zavlin et al, Trud v
sfere nauki (Moscow, 1973), pp. 123-124.

20. G. N. Volkov, Sotsiologiya nauki: Sotsiologi-
cheskiye ocherki nauchno-tekhnicheskoy deyatel'nosti
(Moscow: Politizdat, 1968), p. 216.

21. Dobrov, "Science Policy and Assessment in the
Soviet Union," p. 309.

22. XXIV S"yezd KPSS, II, p. 19.

23. XXV S"yezd KPSS, I, p. 67.

24. Pravda, February 19, 1977.

25. Statement by E. I. Sklyarov of the State Com-
mittee for Science and Technology as reported by Loren
Graham in his "The Place of the Academy of Sciences
System in the Overall Organization of Soviet Science,"
in Thomas and Kruse-Vaucienne, op. cit . , p. 55.

26. See M. A. Vilenskiy, "Sotsial'no-ekonomiches-
kaya ef fektivnost' nauchno-tekhnicheskogo progressa,"
in Gatovskiy, Ekonomicheskiye problemy nauchno-tekh-
nicheskoy revolyutsii pri sotsializme, pp. 138-146;

291

V. Yu. Budavey and M. I. Panova, Ekonomicheskiye prob-
lemy tekhnicheskogo progressa (Moscow: Mysl1 , 1974),
p. 26. Statement about the lack of profit in research
made by Alexander Birman, cited in Science and Public
Policy, III, 4 (August 1976), p. 367.

27. Louvan Nolting, The Planning of Research, De-
velopment, and Innovation in the USSR, U.S. Depart-
ment of Commerce, Foreign Economic Report No. 14 (Wash-
ington, D.C., 1978), pp. 12-13.

28. Lev Gatovskiy, "Ef fektivnost T novoy tekhniki kak
ob"yekt upravleniya nauchno-tekhnicheskim progressom,"
in Organizatsiya upravleniya (Moscow, 1975), pp. 63-
71 and his article, "0 kompleksnom upravlenii effek-
tivnost'yu tekhniki," Kommunist, 14 (September 1973),
pp. 60-73. See also Gatovskiy 's remarks in "Planiro-
vaniye i upravleniye nauchno-tekhnicheskim progressom
v X pyatiletke," Voprosy ekonomiki, 8 (1975), p. 128.

29. V. S. Tarasovich and Yu. B. Kliuka, "Organiza-
tsionnyye formy tekhniko-ekonomicheskogo obosnovaniya
nauchnykh issledovaniy i razrabotok," in V. P. Alek-
sandrova, ed., Problemy planirovaniya i ef fektivnosti
razvitiya nauki i tekhniki v Ukrainskoy SSSR (Kiev,
1976), p. 44.

30. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 117.

31. Boriz Z. Milner, ed., Organizatsionnyye struk-
tury upravleniya proizvodstvom (Moscow: Ekonomika,
1975), pp. 4-5 and Brezhnev, Ob osnovnykh voprosakh
ekonomicheskoy politiki KPSS na sovremennom etape,
II, p. 386.

32. B. Z. Milner, "Formirovaniye organizatsionnykh
struktur upravleniya," Ekonomika i organizatsiya pro-
myshlennogo proizvodstva, 6 (1975), pp. 4-5.

33. Milner, Organizatsionnyye struktury, pp. 5, 6,
16-17, 37.

34. N. S. Kalita and G. I. Mantsurov, Sotsialisti-

292

cheskiye proizvodstvennyye ob"yedineniya (Moscow:
Ekonomika, 1972), pp. 3-4 and Boris Milner, "Organi-
ization of the Management of Production," Social Sci-
ences, VII, 3 (1976), p. 48.

35. XXIV S"yezd KPSS, I, 90, 179-180; P. Danilov-
tsev and Yu. Kanygin, Ot laboratorii do zavoda (Novo-
sibirsk: Nauka, 1971), p. 40.

36. Kelle and Mikulinskiy, "Sociology of Science,"
p. 87.

37. Yu. M. Sheinin, "Nauka i organizatsiya," in
E. A. Belyayev, S. P. Mikulinskiy, and Yu. M. Shei-
nin, eds., Organizatsiya nauchnoy deyatel1 nosti (Mos-
cow, 1968), p. 114.

38. E. I. Gavrilov, Ekonomika i ef fektivnost f nau-
chno-tekhnicheskogo progressa (Minsk, 1975), p. 277;
Kelle and Mikulinskiy, op. cit., p. 87; D. M. Gvishi-
ani, "Sotsial'naya rol' nauki i politika gosudarstva
v oblasti nauki," in V. Zh. Kelle and S. P. Mikulin-
skiy, eds., Sotsiologicheskiye problemy nauki (Mos-
cow: Nauka, 1974), p. 215.

39. Gvishiani, "Sotsial'naya rol' nauki i politika
gosudarstva v oblasti nauki," pp. 213-215.

40. Ibid., p. 213; Kelle and Mikulinskiy, "Sociol-
ogy of Science," pp. 88-89; I. A. Turchaninov, "Ten-
dentsii i formy vzaimosvyazi nauki i proizvodstva na
sovremennom etape," in Problemy deyatel 'nosti uche-
nogo i nauchnykh kollektivov (Leningrad and Moscow:
Nauka, 1977), p. 9.

41. L. S. Blyakhman and A. F. Ivanov, "Nauchno-
proizvodstvennoye ob"yedineniye kak forma sistemnoy
organizatsii tsikla issledovaniye-proizvodstvo," Iz-
vestiya Akademii Nauk SSSR, seriya ekonomicheskaya,

6 (1971), p. 39 and K. I. Taksir, Nauchno-proizvodst-
vennyye ob"yedineniya (Moscow: Nauka, 1977), p. 16.

42. See Milner, Organizatsionnyye struktury uprav-

293

leniya proizvodstvom, pp. 7, 9, 108-111; N. E. Drogi-
chenskiy, ed., Sovershenstvovaniye mekhanizma khozya-
ystvovaniya v usloviyakh razvitogo sotsializma (Moscow,
1975), pp. 160-170; D. M. Gvishiani et al, eds., Vo-
prosy teorii i praktiki upravleniya i organizatsii
nauki (Moscow: Nauka, 1975), pp. 14-15.

43. G. Arbatov, "Proektirovaniye organizatsii krup-
nykh proizvodstvenno-khozyaystvennykh kompleksov i
upravleniya imi," Planovoye khozyaystvo, 5 (1975), p.

2 . This article was also republished as "Sistemy up-
ravleniya krupnymi proizvodstvenno-khozyaystvennymi
kompleksami , " in Vestnik Akademii Nauk SSSR, 10 (1975),
pp. 46-53.

44. Trapeznikov, "Upravleniye naukoy kak organiza-
tsionnoy sistemoy," p. 24.

45 . "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 120.

46. Ibid., pp. 119-122; G. Kh. Popov, Effektivnoye
upravleniye (Moscow: Ekonomika, 1976), p. 136.

47. A. V. Bachurin, Planovo-ekonomicheskiye metody
upravleniya (Moscow: Ekonomika, 1973), pp. 385-386.

48. XXV S"yezd KPSS, I, p. 72.

49. Ibid., II, p. 239.

50. Nauchno-tekhnicheskaya revolyutsiya: Ekonomika
i upravleniye sotsialisticheskim proizvodstvom (Mos-
cow: Mysl.% 1976), p. 28.

51. Ibid., p. 29.

52. M. I. Piskotin et al, eds., Organizatsionno-
pravovyye voprosy rukovodstva naukoy v SSSR, pp. 388-

53. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 117.

54. XXV S"yezd KPSS, I, p. 83.

294

55. Ibid., p. 85.

56. M. P. Ring, "Prohlemnoye upravleniye v nauke,"
Vestnik Akademii Nauk SSSR, 7 (1976), pp. 12-14.

57. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 115.

58. Ibid., p. 121.

59. Pravda, June 13, 1970.

60. D. M. Gvishiani, Organization and Management: A
Sociological Analysis of Western Theories (Moscow:
Progress Publishers, 1972), p. 172.

61. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 121.

62. Pravda, June 13, 1960.

63. Gvishiani, "The Scientific and Technological
Revolution and Scientific Problems," p. 52; G. Popov,
"How Reliable Are the Interfaces?" Pravda, July 27,
1976; XXV S"yezd KPSS, I, p. 164.

64. Milner, "Formirovaniye organizatsionnykh struk-
tur upravleniya , " p. 8 and his Organizatsionnyye
struktury upravleniya. proizvodstvom, p . 7 .

65. Ibid. , pp. 7, 8, 16, 108 and his "Formirovani-
ye organizatsionnykh struktur upravleniya," pp. 8-9.

66. Milner, Organizatsionnyye struktury upravleniya
proizvodstvom, p. 108.

67. Taksir, Nauchno-proizvodstvennyye ob"yedineniya ,
p. 85.

68. Drogichenskiy, op. cit . , p. 169.

69. Gavrilov, op. cit., p. 280.

295

70. See Ekonomika i organizatsiya promyshlennogo
proizvodstva, 6 (1975), pp. 36-37.

71. Popov, Effektivnoye upravleniye, pp. 12-13.

72. Ibid. , p. 13; G. A. Dzhavadov, V. N. Varvarov,
and A. V. Sobrovin, "Organizatsiya ratsionalizatsii
upravleniya nauchno-tekhnicheskim progressom v otras-
li," in G. Kh. Popov, ed., Problemy organizatsii so-
vershenstvovaniya upravleniya sotsialisticheskim pro-
izvodstvom (Seminar g. Kalinin 1-10 fevralya 1974g)
(Moscow: Izdatel'stvo Moskovskogo Universiteta, 1975),
p. 253.

73. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," pp. 118, 121.

74. Ibid., pp. 120-122, 128.

75. V. Ya. Elmeyev, E. F. Denisov, and S. F. Zotov,
"Ekonomicheskiye usloviya soyedineniya nauki s proiz-
vodstvom," Izvestiya Akademii Nauk SSSR, seriya eko-
nomicheskaya, 3 (1976), p. 56.

76. L. Gatovskiy, "Usileniye orientatsii planov i
stimulov na vysoko effektivnuyu tekhniku," Voprosy
ekonomiki , 5 (1977), p. 123.

77. See V. N. Arkhangel'skiy, Planirovaniye i finan-
sirovaniye nauchnykh issledovaniy, p. 162; A. Vershin-
ina, "Nauchno-proizvodstvennyye ob"yedineniya i sti-
mulirovaniye tekhnicheskogo progressa," Sotsialisti-
cheskiy trud, 7 (1976), pp. 32-36; V. Pokrovskiy,
"Upravleniye ef fektivnost 'yu nauki i tekhniki," Eko-
nomicheskaya gazeta, 32 (1977), p. 10.

78. A. Bachurin, "Promyshlennoye ob"yedineniye i
tekhnicheskiy progress," ibid. , 43 (1970), pp. 5-6.

79. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 121.

80. XXV S"yezd KPSS, I, pp. 62-63.

296

81. "Planirovaniye i upravleniye nauchno-tekhni-
cheskim progressom v X pyatiletke," p. 122.

82. Ibid.

83. See Popov, Effektivnoye upravleniye, pp. 128-
136.

84. B. Z. Milner, "Sovershenstvovaniye organiza-
tsionnykh struktur upravleniya," in Sovremennyye me-
tody upravleniya narodnym khozyaystvom (Vilnius, 1974),
p. 22.

297

XII A COMPARISON OF SCIENCE POLICY
IN THE US AND USSR

THE SCIENCE POLICY ENVIRONMENT

In science and technology the United States and
the Soviet Union are truly superpowers. The massive
scientific and engineering enterprises in motion to-
day in the two nations together account for roughly
two-thirds of the world's scientific research and
development. Both countries have recognized that
science and technology play an important role in the
improvement of the human condition in their own so-
cieties and in the world as a whole. Both countries
have recognized that science and technology are fun-
damental to their security; and, further, that the
foundation for S&T advancement lies in a strong edu-
cational system for training scientists and engineers.

In addition to sharing a strong S&T orientation,
the US and USSR exhibit striking similarities in the
evolution of their science policies. In both nations
R&D has burgeoned after World War II. Each has built
within the last three decades an elaborate network of
government agencies and special mechanisms to attend
to the problems and consequences of scientific and
technological advance. Despite different operating
conditions and organizational approaches, both coun-
tries determine science policy at the apex of the
governmental structure. In the US the states parti-
cipate in S&T activities in only a minor role. They
are neither significant performers nor significant
sponsors of R&D, though the states do perform a vi-
tal role in funding and maintaining the educational
system. In the Soviet Union the republics are more
directly in the line of command of the S&T process.
Forming the second level of territorial responsibil-

298

ity and authority for major segments of the R&D ef-
fort, the republics act as a conduit and interpreter
of S&T policy and directives of central bodies. Given
the highly centralized Soviet system and its distinct
set of R&D priorities, however, republic and local
involvement in science planning and management remains
substantially circumscribed. With the exception of
Georgia there are no counterparts to the USSR State
Committee for Science and Technology on the republic
level. "All-union," rather than "union-republic,"
much less "republic," ministries and agencies shape
S&T policy and direct the national R&D effort, just
as they do in economic policy and development more
generally.

On the whole, both countries have made inordinate-
ly high investments in defense, aerospace, and nucle-
ar R&D while under investing in technology for econom-
ic growth. Though technological innovation has cer-
tainly been a more prominent and widespread feature
of the American economy than of the Soviet, still 80
percent of all US R&D has been concentrated in just
five "intensively engineered" industries. Further-
more, 80 percent of federally supported R&D goes to
just two of these sectors — aircraft and missiles, and
electrical equipment and communications.

In both nations, scientific R&D remains highly
concentrated geographically in a few major urban cen-
ters and is performed by a few large institutions.
The Soviet penchant for large-scale organization and
functional specialization is well known. Tradition-
ally, head research institutes and design bureaus
have been given primary responsibility for developing
the main thrusts in science and technology. They are
organized to serve whole branches of industry rather
than individual production facilities. The small
business firm and individual entrepreneur do play an
important role in American science and technology,
especially in innovation, that is virtually absent in
the Soviet system. But even in the United States, in-
dustrial R&D is dominated by a small number of large
corporations. Just 10 R&D performing firms account

299

for more than a third of all expenditures, while the
top 100 companies spend about two-thirds of the total.

During the past decade, moreover, both superpowers
have been forced to adjust their S&T policies to meet
broader national goals and new requirements. Many of
the same concerns that have motivated policy makers
and animated debate in Washington have also been keen-
ly felt in Moscow. Primary preoccupation with ques-
tions of national security, which underlay the science
policy efforts of both countries in the 1950s and the
1960s, has given way, more or less, to greater con-
cern with applying science and technology to solve
domestic civil sector problems. "Research applied to
national needs" has become a new buzzword in American
and Soviet official circles alike. The development
of natural recources, energy, and the environment have
emerged as major issues on the S&T agendas to an ex-
tent unanticipated in either country just a few years
ago. Low economic growth and lagging productivity in
both the US and USSR have stimulated increasing in-
terest in formulating science policies oriented to
industrial innovation. Indeed, the use of R&D, which
both governments practically ignored in science pol-
icy in the past, is finally coming into focus in the
US federal government and is assuming almost exagger-
ated emphasis in the Soviet Union.

In face of these changing conditions and new de-
mands the adequacy of traditional policies and mech-
anisms is being increasingly questioned. In the US
a new partnership in S&T is being called for between
public and private R&D performers. Similarly, the
Soviet regime has been pressing for a closer relation-
ship between research and industry to achieve a more
coordinated effort in the national interest. Both
countries share a concern with the health of science
and technology and debate how to improve capacity and
performance.

In spite of some patterns in common, however, the
science policy environments in the US and USSR are
fundamentally different. Even apparent structural
equivalents may mask basic differences in underlying

300

philosophy, purpose, and operation. For example,
the National Science Foundation, as a general f under
and caretaker of basic science, resembles the USSR
Academy of Sciences. There are strong parallels be-
tween the budgetary process, which is the main tool
for planning, review, and control — at least in the
public sector — in the United States, and the plan-
ning process in the Soviet system; and between the
OMB and the GKNT in their executive management over-
sight and mediating functions in S&T matters. As the
principal advisory arms in science policy at the apex
of the two respective governmental structures, the
OSTP and the GKNT play somewhat analogous roles. In
interagency R&D coordination, the FCCSET is a kind
of American functional counterpart to the GKNT. On a
more general level, certain parallels may even be
drawn between Congress and the Supreme Soviet as in-
stitutional arenas where S&T policies are publicly
debated and legislated. But such national compari-
sons do not really take us far . Though some proce-
dures or institutions look the same, their effects
and significance may be quite different because they
operate in different environments, each shaped by its
own national traditions, values, and circumstances.

The main characteristics that distinguish the
American and Soviet environments are rooted in the
fundamental differences between a competitive market
economy and political pluralism, on the one hand,
and a centrally planned economy and political cen-
tralism, on the other. It is these underlying sys-
temic dissimilarities that account for and shape the
alternative approaches to science and technology in
the two nations.

In the United States the S&T policy process is
diffuse. The organizational structure of the federal
government is highly fragmented and diversified with
a multitude of crosscutting and competing agencies
in both the Executive and Legislative branches con-
cerned with S&T matters. In most of these bodies R&D
is only an activity in support of a broader set of
roles and missions. In the American framework no

301

real mechanism exists to guide policy making and pri-
ority-setting, much less to blueprint and administer
the whole enterprise. Science policy emerges not as
a grand design but rather as the end product of a com-
plex interaction of diverse and partial wills. The
overall set of S&T policies lacks unity and coherence.

In the Soviet Union, on the contrary, there is a
much more formal process, structure, and policy for
science and technology. The set of institutions re-
sponsible for R&D planning and management is more ex-
plicit and functionally specialized; procedures are
more uniform and clearly defined; and authority is
hierarchical and centralized at the top. The whole
system is built, in principle and aspiration, to pro-
duce comprehensive and unified S&T policies that are
an integral part of overall macroeconomic plans and
development strategies.

The roles and responsibilities of government, in
particular, are perceptibly different. In the Amer-
ican setting government plays primarily an indirect
and supporting role, serving as a catalyst to create
a climate favorable to science and its applications.
The system is premised upon a basic division of labor
between public and private institutions as well as
the belief that whenever possible private incentives
and the normal play of market mechanisms should be
relied on to generate relevant R&D and technological
innovation. Only in those areas where market forces
are deficient or where it has major responsibilities,
such as defense and space, does government take a di-
rect administrative role. The difference between
federal markets and competitive private markets must
be recognized. In the former the government frequent-
ly plans, funds, and manages directly the R&D and is
also the principal customer of the results. The whole
process is heavily authoritarian with strong emphasis
on roles and controls, resembling that of the USSR
with its one giant public sector and command economy.
In the latter, the competitive private market, the
government's role is only indirect. This is the ma-
jor American market.

302

By contrast, the Soviet government takes generally
an active and directing role in S&T policy and devel-
opment. Just as industrial advance is the product of
state initiative and administration, the spur to in-
novation also comes from central political authori-
ties. Through state ownership of R&D results and de-
tailed plans the government intervenes directly from
beginning to end of the research-to-production cycle.
Administrative bodies deliberately plan and introduce
new products and processes. The mode of advance is
predominantly innovation by order from the top down;
administrative levers and bureaucratic instruments
are relied on to drive the whole process. Thus the
Soviet government stresses organizational and proce-
dural solutions to science and technology problems.

It is important not to overdraw the image of two
sharply dichotomous models of science and technology
for the US and USSR. The Soviet system is neither as
unique nor as monolithic as it is sometimes assumed
to be. Though highly centralized, the S&T establish-
ment is also heavily compartmentalized among numerous
functional agencies and institutional subsystems. Al-
though military R&D is systematically managed, Soviet
civilian S&T is less centralized. The GKNT has only
partially succeeded as general overseer by concentra-
ting on a limited number of priority areas rather
than all R&D activities. Nor is the American system
as anarchic and freewheeling as it seems at first
glance. Government regulation of innovation dampens
the entrepreneurial spirit. Contradictory impulses
and policies coexist in both environments. Each sys-
tem excels in certain respects and falls short in
others.

To underline the comparative dimensions of Ameri-
can and Soviet approaches, the following discussion
focuses on three major areas of S&T policy: (1) rela-
tionship of scientific R&D to industry; (2) the use
of indicators and measurement techniques in policy
planning and management; and (3) incentives and ob-
stacles to innovation. Finally, the new complexity
barriers that both countries face today in framing

303

effective policies will be briefly discussed. On
both sides the problems promise to tax the imagina-
tion and ingenuity of political leaders and the broad-
er scientific and engineering communities alike.

RELATIONSHIP OF SCIENTIFIC R&D TO INDUSTRY

The relationship of industry to scientific R&D
differs significantly in the US and USSR. This indus-
trial connection, moreover, affects appreciably the
problems of innovation and diffusion in the two coun-
tries. In the United States industry plays two roles
in influencing the conduct of R&D. On the one hand,
industry sponsors, selects, performs, and utilizes
the results of R&D. On the other hand, industry is
the performer and user of R&D sponsored by federal
government agencies. In a lesser role, industry in-
fluences what R&D is sponsored by the federal govern-
ment through submission of unsolicited proposals and
through the use of lobbyists to influence legislation.

In the Soviet Union, industrial enterprises per-
form little R&D; they influence the selection of only
a small portion of the R&D, and directly sponsor only
a minority share of R&D. Except in the newly devel-
oping associations, most scientific R&D is conducted
in institutions independent of the production enter-
prises which ultimately use the results. Industrial
enterprises do not appear to influence directly the
State's selection of R&D to be performed, although
they may influence their own industry R&D facilities
through the intercession of central ministry manage-
ment organs. In general, scientific R&D is an auton-
omous and closed subsystem in the USSR. The dominant
focus has been on R&D as a relatively isolated entity
rather than on the interplay of R&D with industry.
R&D planning has been geared largely to the develop-
ment of scientific and technical potential, that is,
to the expansion of science and technology themselves
rather than to the application of existing knowledge.

304

The creation and use of new technology is fenced off
from general economic activity. Each sphere proceeds
more or less on its own. Organizational structure
and the overall planning process continue to reflect
the fact that science and industry are still largely
separate worlds, coexisting rather than interacting.

American R&D, on the contrary, is more closely
coupled to other subsystems of society. Science for
science's sake has not been an aim of public policy.
Rather, like everything else, science should pay off
if it is to merit public support. In government
agencies, R&D is not considered in isolation but as
part of their broad mission. In industry, management
works on the principle that R&D of itself is not
enough; it must ultimately be exploited in the mar-
ketplace. Thus, R&D is made a component of overall
business strategy and operations.

A major consequence of the greater insulation of
science in Soviet society is that R&D enjoys far more
stability and continuity in the USSR than in the US.
Kremlin policy makers have much more of an investment
mentality toward S&T as growth enterprises than their
American counterparts. The mode of incremental plan-
ning "from the achieved level" provides the Soviet
S&T establishment an assured and rising level of fund-
ing that contrasts sharply with the variability of
American R&D funding patterns. Neither the federal
government nor industry in the US is officially com-
mitted to a base level of funding nor to standard
levels of increase. On the contrary, R&D funding by
industry varies widely with current economic condi-
tions as does federal spending. In both the public
and private sectors the vulnerability of R&D as dis-
cretionary outlays makes difficult the formulation of
durable science policies. In addition, the Soviet
practice of institutional bloc funding, as opposed to
the American system of project funding, makes for
much greater stability at the level of the R&D per-
former .

At the same time, this high degree of stability
characteristic of Soviet science exacts its price.

305

Conservative tendencies stifle creativity and change.
The inertia of institutions and projects is hard to
break. R&D facilities and programs can go for years
without producing any significant results. Above all,
the isolation of research from production decreases
technological innovation and causes problems in de-
livery. The American S&T structure, though not as
stable, is more flexible and dynamic. The greater
stress on results and ultimate use as well as the
closer industrial connection keeps research and de-
velopment both responsive and relevant to the chang-
ing demands of the customer. Though it does not per-
mit the same security for performers and continuity
for projects that institutional funding does in the
USSR, the American mode of project funding coupled
with external peer review provides a more independent
and flexible instrument for terminating unproductive
R&D and initiating new programs. In general, the
market environment causes the research sector to make
painful adjustments from time to time to direct capa-
bilities to where they are needed.

The two systems differ fundamentally in their ap-
proaches to integrating research, development, and
innovation. In the USSR integration is a bureaucrat-
ic function assigned to a hierarchy of special agen-
cies. There is little direct collaboration among in-
stitutional R&D performers. Most external transac-
tions are managed through superior ministerial offi-
ces and departments. Interorganizational linkages,
therefore, are essentially administrative. The ac-
cent throughout is on hierarchical organization, ex-
tensive use of rules, multiple clearances, and long
approval routes. Coordination across organizational
boundaries and functional subsystems is particularly
complex and difficult.

In the US the conduct and coupling of R&D take
place under different operating conditions. The ver-
tical relationship between organizations and plans
for S&T activities is abbreviated because there are
few steps in the chain of command between the setting
of goals and the performance of R&D. Further, there

306

is little coordination by the government between the
determination of goals and objectives for departments
and agencies and production activities in the private
sector. Private firms compete for R&D contracts from
government agencies and offer services that compete
with those provided by the agencies themselves. The
actors in American R&D are separate institutions,
mostly nonhierarchical and relatively autonomous.
They act independently and competitively, and come
together by agreement in mutual self-interest. Link-
age does not occur through directives and approvals
but on the basis of competition and pluralism. Such
cooperation of public and private institutions is one
of the most original characteristics of the American
science and technology enterprise.

These systemic differences underlying the archi-
tecture of linkage, in turn, shape attitudes of R&D
personnel. In the USSR innovation by order and top
down planning and management causes R&D performers as
well as their supervisory ministries to look upward.
They are oriented primarily to pleasing their own ad-
ministrative superiors in the hierarchy. Since they
are not concerned with the distribution and use of
their results, producers all along the innovation
chain are not output-oriented. They are, on the con-
trary, keenly concerned with inputs on the supply side
because this is where major uncertainties and problems
in innovation lie in the Soviet system. Furthermore,
the emphasis on functional specialization and organi-
zational separation tends to direct the vision of in-
dividuals and management bodies toward separate ef-
forts rather than the overall enterprise. As a re-
sult the whole S&T establishment is inward-looking.
Each performer takes a narrow view of his responsi-
bilities, tasks, and interests.

In the American milieu of a highly consumer-orien-
ted society generally and with market pull a major
driving force for successful innovation, R&D perform-
ers are oriented outward, to satisfying their custom-
ers. Competition for customers on the basis of price
and quality makes output and use important considera-

307

tions. Supply is generally not a problem. Abundant
resources are usually available, given sufficient
capital. Rather, attention is directed to the demand
side where in the American setting the basic uncer-
tainties and risks are lodged. Individual and inst-
tutional actors focus on environmental externalities
that may stimulate or constrain innovation, especial-
ly S&T activities beyond their own in-house efforts
that may pose new opportunities or competitive threats,

Given these divergent orientations, R&D personnel
maintain different patterns of communication and in-
teraction. In the USSR functional performers tend to
be separate from each other organizationally and spa-
tially. The predominantly vertical structure of de-
cision making inhibits lateral interaction. Working
contact between R&D specialists and user or client
groups is weak. The later links of the innovation
chain — the introduction and debugging of new technol-
ogy— are in particular poorly developed. Throughout
there is little real interplay, much less team play,
to integrate individual efforts. Self-sufficiency
rather than cooperation is the goal.

The accent in American R&D is on direct interaction
and interdependence among major performers. Continuing
communication among the various participants promotes
mutual understanding, trust, and acceptance. Though
the "not-invented-here" sentiment exists, it is not
so pervasive an attitude as it seems to be in the So-
viet system. In the US personnel also move more both
within and among the different sectors of academe,
industry, and government. Close contact between gen-
erators and users of research is another important
feature. Industry particularly stresses linkage not
just in R&D but also between R&D and manufacturing,
marketing, sales, and services. These connections
help assure the viability of new products and proces-
ses. Some firms organize R&D to involve the user
early in the development of innovations and clients
also participate at critical points. Good will and
good customer relations, it is said, do more for tech-
nological utilization than almost anything.

308

Taken together these features point to different
approaches to technology transfer. In the USSR com-
munication takes primarily the form of the transmis-
sion of documents and routing of information through
formal administrative channels. The main interactions
are between functional performers and higher ministry
authorities who serve as administrative gatekeepers
at critical transfer points. The whole activity chain
moves through different links and stages by hierarchi-
cal referral and bureaucratic relay. In general, the
research-to-production cycle is not an integrated or
integrating process.

In the American framework emphasis is on person-
to-person contact rather than reliance upon printed
information and communication through a middleman.
Informal and oral sources provide key communications
about both needs and technical opportunities. Bridg-
ing roles are played by "technological gatekeepers,"
"market gatekeepers," and "manufacturing gatekeepers,"
all of whom provide information about environmental
conditions that can influence the flow of action. This
close linkage allows scientists and engineers to co-
operate in shaping technical programs and an informa-
tion base. Feedback from the market plays a self-
correcting role and keeps R&D responsive to the user.

This brings us to the question of technology util-
ization and delivery mechanisms. These mechanisms
differ between the private and government sectors in
the US. The federal government, despite its large
investment in R&D, does not take an active role in R&D
diffusion and has not, with a few notable exceptions,
been effective in promoting it. Diffusion is largely
the province of the private sector. Most federal
agencies do not have explicit policies or special pro-
grams for promoting technology transfer. Those that
do usually fall short of the utilization stage. Among
the mechanisms used by federal agencies the most com-
mon and expensive are the S&T information dissemina-
tion services. They are also judged to have the low-
est impact, reflecting the general ineffectiveness of
written communication as a means of technology trans-
fer in the American setting. The most successful ap-

309

proach, on the other hand, has been the highly active
Agricultural Extension Service where field agents
know well the local users and serve, in effect, as
salespeople for new technology.

All these governmental programs encourage research
utilization only after the R&D results have been gen-
erated. Most effective industrial approaches to tech-
nology utilization, however, begin much earlier in the
innovation process. Industry also provides an inte-
grated and coordinated system from conceptualization
to commercialization that does not exist in the gov-
ernmental sector. Indeed such an approach is used in
the public sector only in areas like defense or space
when the federal government both creates and defines
the market and is the principal customer itself. Even
here, however, systems planning and management is not
always efficient or economical.

The practical translation of R&D results is one of
the most deficient areas of S&T policy in the USSR.
Traditionally, Soviet economic policy has minimized
investment in an experimental base and scientific in-
struments industry in favor of investment in on-line
production facilities. The development sector, the
crucial intermediary between research and production,
tends to be neglected. The share of expenditures on
development and engineering applications has been on-
ly about two-thirds that in the United States. As a
result there continues to be a scarcity of experimen-
tal facilities to develop and test prototypes.

In general, the vital interfaces in the transfer
process have not been explicitly and effectively
structured or linked. The utilization of R&D has fal-
len outside the bounds of both science planning and
production planning. Innovation or the introduction
stage has not been an organic part of the system of
planning and administration. There is no special pur-
pose organization charged with managing diffusion in
the Soviet Union. For the most part, extensive — but
ineffective — S&T information storage and retrieval
systems have been relied on. These services, which

310

are managed and coordinated centrally, befit the gen-
eral pattern of Soviet communications.

Since the late 1960s Kremlin authorities have
shifted from passive mechanisms to more active strat-
egies of technology transfer to enhance industrial
research utilization. Adopting a process view of in-
novation, they have established new institutional ar-
rangements and organizational forms that seek to span
and integrate the multiple participants and stages in
the innovation cycle. The development of research
complexes along the lines of some American industrial
research parks has been emphasized in the belief that
the desired benefits of cross-fertilization, sharing
of facilities and interdisciplinary cooperation are
better achieved through such close association. Dif-
ferent types of research complexes have evolved, in-
cluding (1) formal incorporation of research, design,
and production facilities in single organizations,
such as the production and science-production asso-
ciations, and (2) more recently, geographic colloca-
tion of R&D facilities. The creation of special or-
ganizations concerned with the introduction of new
technology is less well advanced. Forms of project
management and matrix organization used in American
R&D are, however, being modified and tried in the So-
viet context.

SELECTION OF S&T GOALS
AND EVALUATION OF RESULTS

In the United States major goals (problems) need-
ing S&T solutions are selected not as a formal plan-
ning activity but through a complex political-economic
process that is not well understood or economically
efficient. No formal procedure or time schedule
exists for such selection, no one body to establish
goals and to measure results. Both the Executive and
Legislative branches have identified such major goals
as space exploration, cancer research, improved envi-
ronmental protection, and energy research and devel-

311

opment. In general, the mission agencies of govern-
ment have assumed responsibility and authority for
recognizing scientific opportunities and for steward-
ship. Given the decentralized nature of American R&D
neither the selection of topics nor the allocation of
funds is a simple process in government. The fragmen-
tation of structure and competence mediates against
comprehensive policy planning and analysis.

In the US the budget process represents the clos-
est thing in government to a systematic effort at re-
source planning, program evaluation, and integration.
But it is a highly imperfect tool. There is no spe-
cial budget or special budget process to integrate
R&D into a broad S&T policy or national goals. Rather,
the budget is prepared and judged on a departmental
basis; the total federal R&D budget is largely an af-
ter-the-fact-summary of the R&D budgets requested by
each agency and justified in terms of their separate
missions. The multitude of agencies in the Executive
Branch concerned with S&T matters is matched by a
multitude of committees in Congress that share re-
sponsibility for budgetary analysis and appropriation.

This pluralistic method of budgeting for R&D makes
difficult the formulation of policies and coordina-
tion of activities across traditional government sec-
tors and independent agency lines. Although some ef-
forts are made — largely by the OMB and, to a lesser
extent, by the OSTP — to ensure priorities and balance
in S&T programs, no integrative mechanism draws sci-
ence policy toward a rational approach to problems of
choice, of costs and benefits, of needs and opportu-
nities. To be sure, the need is generally recognized
for some central focus and oversight to ensure great-
er consistency and coordination among plans and agen-
cies. Regardless of how compelling the case seems
for more systematic S&T planning and evaluation, how-
ever, the basic fact remains that such a planning and
analysis function does not fit easily into the plural-
istic form and competitive ethos of American govern-
ment with its fundamental emphasis on political advo-
cacy, bargaining, and compromise in reaching public

312

decisions. The capability for such policy analysis
and integrated systems management exists only in ex-
ceptional instances where the nation has been galva-
nized towards a single goal or where a single nation-
al project has the general consent of the populace.
For the most part, decisions are made piecemeal.
Throughout the process there is considerable confu-
sion and disagreement, but the nation accepts these
inefficiencies and imbalances as the cost of diversi-
ty and of decision making that values open markets,
adversarial relations, and consensus building in pub-
lic policy.

In the Soviet Union the planning of R&D is highly
structured in a top down manner. Most important S&T
goals are formally identified and selected. Current-
ly, this list consists of approximately 200 major
problems. The solutions to these problems are sched-
uled over periods of from one to three five-year in-
crements and are incorporated into the macroeconomic
plans for the USSR as a whole. Not only do plans
specify general objectives, but they also detail all
measures necessary for the attainment of goals, such
as requisite resources and their interrelationship,
experimental design, assignments for output and tech-
nology transfer, construction of new facilities. In
addition, the mechanisms for plan expression and en-
forcement, such as indicators, norms, standards, and
incentives, are similar at all levels and in princi-
ple are mutually reinforcing and internally consis-
tent. In the USSR, then, the whole structure of hi-
erarchical relationships is designed to integrate the
various activities of different units around central-
ly determined general goals. Thus, in principle at
least, the Soviet system offers great potential for
comprehensive planning, coherent analysis, and balanc-
ing assessments in S&T policies.

In practice, however, Soviet R&D planning suffers
from serious deficiencies. Some of these result from
the inherent uncertainties and unpredictability of
innovation itself. Others are deeply rooted, however,
in Soviet organization and procedure. Though highly

313

centralized, policy planning and analysis is heavily
compartmentalized not only in vertical branch minis-
tries but also in the numerous special functional
agencies. The innovation cycle is fractured in time,
task, and territory. The basis of planning, financ-
ing, and management is still primarily the functional-
institutional performer rather than programs, pro-
jects, and work stages. Furthermore, S&T planning is
also separate from and insufficiently coordinated
with the planning of production.

Much as in the US, therefore, it is difficult for
central S&T policy makers in the USSR to exert inte-
grating influence upon a basically pluralistic admin-
istrative structure. The heavy chalk marks which de-
lineate different bureaucratic subsystems and insti-
tutional domains are not easily erased. To be sure,
there are more deliberate attempts than in the US at
overall priority-setting, program assessment, and co-
ordination. But the capabilities of the GKNT — the
main balancing wheel of the Soviet S&T mechanism — and
other functional agencies to analyze and evaluate al-
ternative program goals, costs, and benefits are con-
strained at every turn. They frequently lack the
authority and means to perform their integrating func-
tions. Given the nature of their overlapping and
shared responsibilities for R&D planning and manage-
ment, the state committees are often forced to seek
the approval of and accommodate themselves to various
ministries, departments, and other state committees,
not to mention Party agencies. As a result they per-
form a continuous and difficult balancing act in which
national goals and priorities are reconciled with the
special interests of the numerous organizations that
conduct the national R&D effort.

The Soviet planning process, then, like the Ameri-
can budget process is salted with bureaucratic rival-
ries. Though calls are periodically heard to strength-
en the integrative capabilities of the GKNT, there is
still little inclination to give the State Committee
or any other body the clout necessary to forge coher-
ent, focused programs across ministerial and depart-

314

mental lines. To do so would require an accommoda-
tion with Gosplan, the Academy of Sciences, and the
whole machinery of government that could not easily
be achieved. Problems of interagency coordination
and cooperation therefore remain unsolved. The Krem-
lin continues to experience considerable difficulty
in building a uniform national S&T strategy, unity
of purpose, and commitment that transcend the paro-
chial preferences of each player.

Generally speaking, both nations have been unable
to impose a long-term view on R&D planning and analy-
sis. In the United States the annual budget and a
four-year Presidential term make long-range projec-
tions in the public sector difficult. Lacking as-
sured R&D funding, individual agencies tend to re-
spond to short-term needs and pressures and to ne-
glect long-term programs. American industry, too,
operates on a short time horizon. Industrial manage-
ment is largely preoccupied with immediate markets
and short-term profits as distinct from longer range
payoffs from R&D with its attendant risks and uncer-
tainties. Long-range, dedicated innovation often oc-
curs by accident through the actions of deviants.

Despite explicit emphasis on and formal procedure
for long-range planning and forecasting in the Soviet
Union, Kremlin authorities have also not been able to
develop a strategic approach to S&T policy. The plan-
ning of R&D has been oriented to building up S&T po-
tential; a focus on specific goals and end use has
been lacking. The planning of technological innova-
tion and utilization has been geared to solving cur-
rent production tasks. The two spheres of activity
generally are decoupled. The R&D plan has been es-
sentially an appendage of the general macroeconomic
plan, and insufficiently integrated with it. Though
we tend to associate Soviet economic decision making
with "five year plans," planning in the USSR really
proceeds in one year intervals. The Soviet budget is
also an annual budget. A tendency to plan from the
achieved level and a predominantly incremental style
of decision making hold sway throughout the system.

315

In the USSR, too, the present tends to drive out the
future.

Steps have been taken in recent years to broaden
the vision of Soviet S&T planners. The five year plan
has indeed resumed importance as authorities have put
increased stress on careful and comprehensive formu-
lation of goals over longer periods to concentrate
resources better on priority projects and provide
greater direction and control over the nation 's R&D
effort. A fifteen-year program has also been drafted
for the development of science and technology for the
period 1976 to 1990. This program is designed to
serve as the organizing framework for a broad 15-year
development plan for the economy as a whole. This
general macroeconomic plan has not yet appeared, how-
ever, testifying to the continuing difficulties that
beset the drafting of feasible long-range Soviet plans,
The framers of the S&T program, moreover, have also
been ordered to rework their forecasts. Obviously,
the proper formula, political and analytical, has not
yet been found for striking a balance between present
interests and future needs.

By and large, then, the science and technology en-
terprises in both the US and USSR run on momentum and
incrementalism. With tight constraints on zero-based
budgeting and programming and a short time horizon,
these tendencies cause both systems to remain input-
oriented rather than output-oriented.

The Soviet system is particularly incremental. The
tendency to plan from the achieved level reflects an
"add on" approach to design that encourages scaling
up existing processes rather than developing new ones
and sees continuity as the best guarantee of meeting
planned output goals. The S&T plans themselves en-
dorse incrementalism. These plans, once approved,
carry the force of law; there is little flexibility
between planning periods and the cumbersome process
of revising plans produces rigidity and little oppor-
tunity for quick remedial action within the periods.
The plans are most rigid at the higher levels, with

316

only limited flexibility at the level of the insti-
tute, design bureau, and individual researcher. In
the US, however, S&T activities are highly flexible,
responding to changing conditions at all levels from
the national to the individual research scientists
The innovation cycle is more sequential and dynamic
than in the Soviet Union, with more review and re-
evaluation as development proceeds.

Neither the US nor the Soviet Union has mapped any
firm normative rules or fixed indicators to guide
strategy and policy development in science and tech-
nology. Until recently in both countries, science
and technology had generally unrestrained standards
and unlimited drawing accounts. The need for con-
straint was seen in the US in the 1960s. In the
1970s, the Soviets tried to define a set of "basic
indicators," such as the technical and economic indi-
cators established by Gosplan in 1974, but these are
incomplete. The measure of inputs remains by default
simultaneously the measure of output because of the
absence of any precise norms for planning and alloca-
tion. Yet the need for standards is real. Three
general criteria are being used: technical, economic,
and social. Technical considerations have been fore-
most in both the US and the USSR. The S&T effort has
focused on big military, space, and nuclear programs.
With such programs, science policy has enjoyed the
advantage of being stable and specific, limited to a
small domain of government activity and particular
projects.

Increasingly, however, science policy has needed
to reflect the social and economic effects of techni-
cal progress. In particular, national attention in
the US is focusing on the implications of technologi-
cal change for the environment, health, and public
safety. Government regulation in these areas has ex-
panded greatly, to the point where private industry
feels a threat to its own S&T initiatives. The eco-
nomics of S&T are also being stressed, although no
clear market or economic criteria for federal funding
of civilian scientific R&D have been developed. A gov-

317

eminent agency's relative isolation from the market-
place also suggests the need for new mechanisms to
link more effectively the funders, performers, and
users of R&D.

By comparison, the Soviet system responds even less
to popular attitudes and market forces. Faith in the
intrinsic desirability of science and technical prog-
ress has not diminished in the USSR as it has in the
US. Consequently, Soviet policy may pursue projects
like the TU-144 supersonic transport and a continuing
large-scale space program which embody advanced sci-
entific, technological, or design solutions that might
be vetoed in the American setting by commercial con-
siderations or popular demand.

Nonetheless, since the late 1960s Kremlin authori-
ties have become more aware of constraints on resour-
ces and concerned about effectiveness of their use.
While environmental impact statements have not yet
become mandatory in R&D planning, the importance of
ecological factors is on the rise. Above all, econom-
ic considerations have become prominent; all proposals
for R&D projects must be supported by calculations of
economic return redounding to the users of the new
technology and to the economy as a whole. The main
aim of this requirement is to weed out nonpaying, im-
practical R&D and to raise the cost-effectiveness con-
sciousness of the S&T establishment. (The requirement,
however, is often not observed) The economic orienta-
tion of the basic indicators for planning S&T prog-
ress, issued in 1974, is also clear. With emphasis
on accelerating technological innovation and raising
production efficiency, these indicators seek explic-
itly to couple more effectively S&T policy with eco-
nomic policy, the planning of R&D with the planning
of production.

Of course, economic return has long been the main
criterion used by American industry in selecting R&D
pursuits. For industry the problem is chiefly one of
assessing the long-term potential of a product line.
This typically involves such factors as actions of

318

competitors, market size and segmentation, government
regulatory policies, image, corporate objectives, bud-
getary limitations, needs of production operations,
and definitions of the lines of business in addition
to purely technical considerations. Market research
and information on user needs are essential elements
in effective research planning; industry remains con-
vinced that reliance on strictly rational components
and technological opportunities are doomed to failure.

Although the criteria for both countries can be
grouped as technical, social, and economic, they are
defined differently in the two systems, and thus have
different practical significance. The differences in
S&T policy are rooted in the difference between a bu-
reaucratic system of planning and evaluation and a
market system. In the USSR an administrative bureau-
cracy defines the relevant criteria and judges suc-
cess on the basis of how well organizations meet mul-
tiple plan targets for output, costs, and profits as
defined by formal rules. In practice, these rules
have no necessary relation to the efficient use of
resources, which are economized only incidentally in
response to explicit instructions and definitions.
Prices are also set administratively in an arbitrary
and autonomous manner. In effect, Soviet R&D perform-
ers face neither true output markets nor true input
markets. An organization's performance is not eval-
uated in any market external to the organization but
directly and immediately by administrative superiors
on the basis of how well it seems to be meeting
planned objectives.

In the United States the market largely determines
choices especially in industry. Specifications for
success are set by the customer, not by an adminis-
trative boss in some government office. The market
test is a comparison of one firm with another in the
same field. Success depends on the behavior of one's
competitors as well as one's own performance. Thus,
a private firm may achieve its production, sales, and
cost goals and lose money, or it may fail to meet its
goals and yet do better than its competitors. The ul-

319

timate test is survival in the market. Conversely,
a Soviet organization may meet its plans and be re-
warded but be less profitable and innovative than
other organizations. It may underfulfill its plans
but be more efficient than other organizations. In
American business evaluation rests largely at the
bottom line: profit in the market. In government
there is no comparable bottom line. To a large ex-
tent, it is the appearance of success that counts,
much as in the Soviet environment generally.

Soviet criteria have, then, an artificial quality.
Though several economic levers, such as cost, price,
and profitability, are used, they become transformed
essentially into administrative levers. There is al-
so no acceptable criterion of fulfillment, no entire-
ly satisfactory measure of research and innovative
output. The economic effectiveness of proposed R&D
is calculated mainly to award bonuses rather than to
decide whether to undertake the R&D in the first place,
Decisions regarding evaluation and incentives, more-
over, are taken predominantly on the basis of planned
or estimated economic return, not on real results and
savings. The link between economic benefit and bonus
awarded is tenuous. Though calculations of the ac-
tual economic return are, in principle, to be made
following the application of R&D results, they are in
practice rarely computed or recorded. The quality
of planning and performance are judged only in terms
of the plan itself; the planned targets become the
evaluative criteria. Hence, a real need exists to
build evaluation and adaptation into the Soviet plan-
ning and assessment process.

In sum, both countries have made progress in broad-
ening and refining the criteria for planning and man-
aging R&D. There are still difficulties — the uncer-
tainties inherent in the R&D process; the lack of gen-
erally accepted methods of evaluating the results,
effects, or benefits of R&D; gaps in information;
loopholes in procedure; the growing complexity of R&D
projects. American and Soviet decision makers alike
are reaching for more sophisticated analytic tech-
niques to improve planning and resource allocation,

320

to specify objectives, and to evaluate alternative
ways of accomplishing these goals.

In the United States several specialized planning
(e.g., PPBS) and project management (e.g., PERT and
CPM) methods came into use during the 1960s. They
were designed primarily for large development programs
in aerospace and defense-related fields — that is, in
sectors which operate much like command economies. The
magnitude and complexity of these programs demanded
sophisticated and high-capacity management control
systems. Although only the largest companies and the
military use PERT techniques and only on the most com-
plex projects, systems thinking is a prominent feature
of the research management environment in general in
the United States. The inherent uncertainties in R&D
and the difficulties of trying to quantify social ben-
efits, however, generally rule out the application of
highly quantitative systems planning and management
techniques.

In the USSR a similar systems movement burgeoned
in the 1970s. The demand for techniques which view
projects in a total systems perspective began to be
clearly felt as the regime launched a number of crash
development programs to speed technological innova-
tion. Formal program-type planning methods appeared
along the lines of PERT and other sophisticated Amer-
ican models. These techniques were developed, in par-
ticular, for application in the complex interbranch
S&T programs of national priority, which previously
suffered from faulty systems planning and management,
and to improve management effectiveness in general.

Such sophisticated planning and control techniques
are compatible with the Soviet predilection for high-
ly structured activities. Used for some time in the
defense sector, such methods have not generally been
applied in civilian R&D which is constrained by the
structural and administrative fragmentation of the re-
search-to-production cycle. Formal procedures for
multiagency planning, financing, and management are
still confined largely to the interbranch programs
and complex projects, although a few ministries have

321

also introduced systems planning and programming into
their intrabranch operations. Simple evaluative meth-
ods and manual calculations are on the whole preferred
over highly sophisticated analytic techniques and com-
plex mathematical formulas. By and large, the abacus,
not the computer, remains the standard tool.

In both countries, then, scientific R&D still falls
generally into the realm of poorly structured decision
problems for which modern systems analysis and scien-
tific management techniques are not very useful. Such
formal methods have been mainly reserved for massive
development projects, especially those resulting in
the production and operation of advanced hardware. The
unpredictability of fundamental and some applied re-
search resists planning and control by such methods.
Decision makers in both countries will continue to re-
ly on a mix of formal and informal instruments, eval-
uation by colleagues, and subjective experience. In
short, science policy in both nations will remain an
inexact science.

INCENTIVES AND OBSTACLES TO INNOVATION

The basic systemic differences between the two na-
tions foster divergent approaches to another important
area of science policy: incentives and obstacles to
innovation. Though the United States and the Soviet
Union both have special policies and mechanisms in di-
rect support of innovation, indirect influences are
probably more significant. Forces and government
policies bearing on basic economic activity have an
effect as well on R&D, whether intentionally or not.
By shaping the general economic climate and value sys-
tem of management, broadly aimed government actions
can stimulate or constrain innovation. Policies de-
vised explicitly to promote technological advance or
to guide its direction may, in fact, have relatively
small influence.

322

This trend holds for both countries but for very
different reasons. In the US innovation is more
closely woven into the whole economic fabric and cul-
ture of the nation than it is in the Soviet Union.
The industrial connection is a close one, and Ameri-
can R&D, therefore, is powerfully influenced by the
general condition of industry. In the USSR general
economic policies are of overriding importance pre-
cisely because of the separation of R&D from produc-
tion. Science and technology have not been driving
forces of the Soviet industrial machine. Indeed, the
production sector strongly discriminates against in-
novation. The supplementary guidance system of spe-
cial agencies, plans, budgets, and incentives orien-
ted to the advance of S&T still stands largely apart
from the primary guidance system for basic economic
activity. Science policy continues to have little
appreciable impact on the normal processes of econom-
ic life in the USSR.

At issue in both systems is the problem of balanc-
ing the risks and rewards associated with innovation.
The balance rests on profits tied to the market in
the American setting and bonuses tied to plan fulfill-
ment in the Soviet. Both company profits and enter-
prise bonuses vary with general organizational perfor-
mance, as do the rewards to management. Hence, Soviet
industrial managers tend to maximize bonuses as their
American counterparts maximize profits. In neither
country is the management reward structure attuned to
the pace of innovation. Both American and Soviet man-
agement work with a short time horizon, and each tends
to fall into a profit-^NOW and bonus-NOW syndrome. Ori-
entation to production means that innovation consists
largely in the adoption of less risky, small size
cost-reducing processes rather than the creation of
basically new products. Moreover, the problems of in-
novation in both countries lie not so much in internal
management as in relations with outside organizations,
principally with suppliers in the Soviet Union and
with customers in the United States.

On the whole, the balance of risk and reward in
the USSR still tends to work against innovation. Al-

323

though the bonus indicators and decision time frame
have been modified recently to make them more hospi-
table to innovation, these adjustments have not yet
significantly altered the rules structure in favor
of technological change. Indeed, the new incentive
system itself has become so complex that management
is probably more uncertain than before about just
what consequences and rewards may be expected from
alternative choices. There are still no precise rules
to guide decision making. The problem remains one of
trying to decide which of the many assigned tasks car-
ry the most weight in the minds of one's superiors and
must be attended to. In general, the primary success
indicators still revolve around the fulfillment of
output-related rather than innovation-related tasks.
Innovation continues to risk failure to meet the ful-
fillment of plan targets for output and brings few
rewards for success. Indeed, bonuses for new technol-
ogy usually do not compensate for the decline in pri-
mary bonuses that inevitably comes with innovation,
at least not in the short run. In sum, the special
incentive programs -for innovation in the USSR still
do not provide a real counterweight to the general
incentive structure designed to support current eco-
nomic production and technology. The two incentive
systems continue to coexist and to contradict each
other.

In the United States as well innovation continues
to be a difficult and dangerous business with a high
failure rate. Indeed the balance of risk and reward
seems to have settled increasingly on the side of
constraint as the general rate of innovation fell in
the 1970s. The major barriers are still market-rela-
ted uncertainties. Increasing uncertainties about
government regulatory policies and future rulings al-
so adversely influence market behavior and private
S&T initiatives. The growing burden of regulation
over the past decade, in fact, has perceptibly slowed
the process and increased the cost of innovation in
several areas. Given these uncertainties, management
usually finds alternative investments that can yield
a potential return equivalent to that of R&D and at
far less risk. Nonetheless, the rewards for success-

324

ful innovation are substantially greater in the Uni-
ted States. . The American system provides better the
opportunity, the capacity, and the pressure to inno-
vate than the Soviet system in which innovation con-
tinues to be looked on mostly as a burden or unneces-
sary nuisance.

Each system, to be sure, offers certain intangible
benefits, but even in the USSR the terms of competi-
tion between innovational activity and other alterna-
tives are increasingly economic. Indeed, the share
of bonuses in managerial income has been steadily ri-
sing since the mid-1960s and are a stronger incentive
in decision making today than ever before. Differ-
ences in national attitudes towards property, however,
affect significantly the structure of economic rewards
for innovation in the two systems. In the United
States private ownership of the results of R&D — and
the associated opportunity for major economic gain —
creates a powerful incentive to the individual and to
the firm. The American patent system, moreover, con-
fers a temporary monopoly during which time the in-
ventor or innovator can exploit his ideas and protect
his competitive edge. Indeed without the protection
provided by patent rights many entrepreneurs and in-
dustrial firms will simply not take the risks involved
in innovation. By contrast proprietary rights over
all R&D results in the USSR are held by the State. The
inventor or innovator is compensated with a lump sum
payment which cannot exceed some fixed maximum. For
a single invention the upper limit is 20,000 rubles.
Statutory ceilings are also fixed on individual bonus
earnings of all kinds so that a person may not re-
ceive more than a certain percentage of his base sal-
ary. Nor can a person receive in innovation bonuses
in any one year more than 1200 rubles. Only planned
innovations, moreover, not unplanned ones, are eligi-
ble for bonus awards. Indeed there are upper limits
on virtually every part of the incentive structure in
the Soviet Union. Bonuses for innovation relative to
rewards for non- innovation alternatives are also not
sufficiently large to provide an effective incentive
for a high rate of technological change. In general,

325

the incentive system still rewards competent but con-
servative management and offers little for innovation.

On the other hand, penalties for non-innovative be-
havior are also much greater in the US than in the So-
viet Union. Part of the reason lies in the basic dis-
similarities between a competitive market economy and
a centrally planned economy. In the US, competitive
market pressure is a principal driving force behind
innovation. If a firm does not respond to the threat
posed by the introduction of new technology by com-
petitors, it may not only lose its share of the mar-
ket but indeed be eliminated altogether. In the US
technological change is a major cause of dissolution
or bankruptcy of firms. As we have noted, a firm's
performance is ultimately judged on the basis of not
only its own innovative behavior but that of its com-
petitors as well. The need to keep up with, if not
ahead of, innovating competitors literally forces
American business to innovate.

The Soviet system, however, lacks strong sanctions
for failure to innovate. The kinds of built-in com-
petitive pressures that exist in the American market
economy are not present. There is competition, it is
true, but socialist competition is a carefully con-
trolled exercise in which everyone competes according
to plan. There are only winners — and no losers, since
losers really lose nothing. Today sanctions imposed
when plans are not fulfilled are rarely more severe
than modest monetary penalties. The plan for new tech-
nology continues to be the one plan in the USSR that
is consistently underfulf illed. The economic viabil-
ity of the non- innovating enterprise is not automati-
cally threatened by the decision not to innovate. So-
viet enterprises do not go bankrupt or out of busi-
ness. Inefficient plants are not placed in a severe-
ly disadvantageous position in relation to innovating
establishments. On the contrary, the opposite holds.
Just as there is a ceiling on the available rewards
for successful innovation, there is also a floor to
cushion the risks of failure. The organizational
structure protects producers against losses from both

326

their own unsuccessful innovations and the successful
innovations of others. Fundamentally, a Soviet organ-
ization competes not against other facilities but in-
stead against its own past performance record. In ac-
cord with the principle of planning from the achieved
level, its targets are set predominantly in relation
to its own earlier institutional results. This also
explains in part why the rate of diffusion of innova-
tions is also lower in the USSR than in the United
States. New products simply do not drive out old
technology under Soviet operating conditions as rapid-
ly as they do in a competitive market.

Finally, the two systems differ in their capacity
to accommodate and discharge the innovation function.
In the US large companies are frequently not good at
innovation. They exhibit, in fact, the same kinds of
vested interests in and preferences for established
products and processes, set styles of organizational
behavior, and conservative management outlook that
characterizes many Soviet organizations. The key role
in innovation is played by the small company or tech-
nological entrepreneur that is able, again and again,
to break into the system with new technology and tech-
niques. Although relatively good at innovation, the
entrepreneur or small business, however, generally
lacks the capabilities to mass produce and market the
innovation. These skills lie with the large companies
that often become major customers for the high tech-
nology products of the small ones. The large compa-
nies may also buy the small company since the risk of
the established new technology is now diminished. Such
a merger permits the parent company to evolve and re-
new itself. In general, then, the small innovating
firm introduces a healthy competition to established
companies.

In the USSR such a healthy symbiotic relationship
does not exist. Indeed, the system does not provide
the conditions of entry whereby the technological en-
trepreneur can easily emerge, much less succeed, out-
side the network of established institutions and ar-
rangements. Under traditional operating practices
individuals and organizations who are both capable of

327

and interested in effecting the transition of scien-
tific results into application have been lacking. The
task of innovation has generally fallen outside the
domain of either R&D or production facilities. The
critical functions have not received the management
attention they deserve. To be sure, the Soviet Union
has demonstrated the ability to innovate, but usu-
ally in a few select priority areas. It has not de-
monstrated a capacity for technological innovation
along a broad front. In general, the development of
a new product requires either breaking into the sys-
tem with the support of higher authorities or creat-
ing new organizations outside the regular channels.
On the one hand, the rigidities of the existing sys-
tem of planning and management are eased by the pri-
ority attached to the innovation; on the other hand,
they are bypassed altogether. The system simply does
not accommodate easily unplanned and unsponsored in-
novations from without and from below.

INSTITUTIONAL RESPONSES TO NEW COMPLEXITY
OF S&T PROBLEMS

Science policy is acquiring enhanced importance in
both the US and the USSR as each rests its future
largely on progress in science and technology. Many
of the pressing problems, facing both countries today
have strong S&T components as part either of their
cause or of their solution. Science and technology
are giving new direction and shape not only to nation-
al policies but to the international relations of the
two superpowers as well. What stands out about the
interactions of science, technology, and society is
that they are becoming increasingly complex and high-
ly contingent in both systems. The major challenge
before American and Soviet policy makers alike, then,
is how to integrate their science and technology en-
terprises to match the complexity of problems to be
solved.

328

In neither system, however, are present mechanisms
well suited to solve contemporary S&T problems. Each
nation has evolved over the years a relatively set-
tled division of responsibility among an array of spe-
cial administrative agencies and separate performing
institutions. But the problems and the solutions in
science policy today cut across established bound-
aries. Effective problem-solving requires a high lev-
el of coordination and cooperation. The multiple par-
ticipants in the innovation process need closer rela-
tions that still recognize their distinct roles. The
creation and administration of such linkages, in turn,
demand of both systems a new level of management and
of imagination.

Though both nations are beset by the mounting com-
plexity of S&T problems, the nature and source of com-
plexity differ in the two systems as do their evolving
institutional responses to overcome the new barriers.
In the United States both the public and the private
sectors — and their interaction — are growing more com-
plex. This complexity acquires added significance as
science policy focuses increasingly on solutions of
domestic civil sector problems, requiring a more di-
verse and less centralized approach than military and
space problems. The role of the federal government
and of industry in public technology and methods for
stimulating innovation to improve the quality and ef-
ficiency of public services are unclear. In particu-
lar, government regulation has grown as a national
concern. The proliferating demands and standards im-
posed by government and the costs of regulation are
beginning to inhibit seriously both university re-
search and industrial innovation. Reform efforts are
underway to rationalize the whole regulatory process
and to make regulation itself cost-effective by in-
troducing and requiring economic analysis and atten-
tion to costs in regulation. Underpinning regulatory
revision is the need for new approaches to achieving
a better balance between risk and benefit. Nonethe-
less, basic knowledge about the factors involved is
still weak, and there is no agreement about how to
measure the costs and benefits associated with this
new set of S&T problems.

329

The Soviet Union also faces new complexities in
creating an integrated approach to technological in-
novation in the domestic civil sector, especially the
economy. Integrative capabilities, both analytical
and administrative, are much more deficient in civil-
ian than in military R&D. The problems of securing
collaborative and coordinated actions across depart-
mental boundaries are particularly complex and dif-
ficult because of the strongly vertical axis of the
Soviet system. Yet such cooperation will be neces-
sary to accomplish the numerous interbranch develop-
ment projects and massive modernization programs re-
quired to solve domestic problems. The bureaucracy
of government is not congruent with contemporary S&T
problems. But Kremlin authorities hope that modern
management methods and systems engineering can pro-
vide solutions. Given the importance of bureaucratic
levers in driving the Soviet innovation process, im-
provements are being sought through new administra-
tive measures. Although the project planning ap-
proach might be good for certain specific programs,
it does not seem to be suitable for R&D as a whole.
The relevance of R&D to achieving industrial effi-
ciency and quality must be assured; at the same time,
the general health of science and technology must be
maintained. Soviet science policy simply did not
have to address these issues, at least not in present
terms, earlier.

In their approaches to contemporary problems of
science policy design and management, both superpow-
ers seem to be experimenting to some extent with
practices of the other. In the US there is growing
concern with centralizing certain functions, such as
data storage, while in the USSR attempts are being
made to introduce some form of competitive pressure
and greater local initiative to stimulate decentral-
ized innovation and diffusion. Each system is seek-
ing a new balance between centralized and decentral-
ized modes of operation without altering, however,
its basic system design and approach. As we have
seen, many differences between the two systems are
rooted in fundamental differences in management phi-

330

losophy, property relations, and social values. These
factors tend to rule out certain practices altogether
and circumscribe the possibilities of change. It is
evident, however, that improved understanding in each
country of the other country's approaches is valuable
in its own right and creates the opportunity for each
to benefit from the other1 s experience and collective
knowledge of its citizenry. And with greater mutual
understanding it may be possible for both giants to
cooperate in solving some of their mutual transnation-
al problems through science and technology.

331 * U. S. GOVERNMENT PRINTING OFFICE : 1980 327-927/6532

'J