Acknowledgements

Agricultural transition in the former Soviet Union has, surprisingly for many observers, not led to a widespread adoption of individual farming. This article attempts to under-stand some previously neglected forces behind this outcome. It develops a theoretical model of farm restructuring in which managers exploit the preferences of workers for conformity within a social reference group to cement their own power. The model pro-vides a rationale for the persistent support among workers and managers to the status-quo organisation, despite the availability of a more efficient individual farming option. Based on empirical evidence, we argue that managers have an incentive to keep hori-zons of workers limited by sheltering them from pro-reform influences. Polar reform equilibria are generated that are consistent with the observed spatial patterns of restruc-turing. The model predicts that policies aiming at the establishment of independent farms will fail unless they induce a ‘big push ’ in reform attitudes among workers. Keywords Agricultural transition; former Soviet Union; social interaction effects; farm restructur-ing. JEL classificatio