The current situation of technical progress and product innovation in the Soviet Union is paradoxical. One cannot help but be impressed with the great Soviet advances in certain high priority and strategic spheres of industrial activity such as sputniks, missiles, and atomic power projects. At the same time Soviet sources voice widespread complaints about product-innovation at industrial enterprises in general. Most sources attribute managerial opposition as being a major barrier to product-innovation. This article focuses on enterprises producing machinery and consumer goods, since the writer's interviews with Soviet officials and his study of written sources relate primarily to these branches of industry. The findings are, however, generally applicable to most other types of industrial enterprises as well. In the branches of industry under study, managerial opposition to product-innovation is intensive and widespread. This article will analyze the specific conditions of the economic milieu that cause such managerial opposition. In July 1960, the Soviet government issued a decree that stipulated a number of reforms aimed at encouraging enterprise innovation.