1 DOES EMPLOYEE OWNERSHIP SURVIVE THE TRANSITION? CASE STUDY EVIDENCE FROM ESTONIA

Privatisation to employees has been common in privatisation processes in Estonia and elsewhere in transition economies, but the available evidence suggests that employee ownership is declining. In this paper, I use the concept of ‘degeneration ’ from the literature of worker co-operatives in explaining the decline. In the first part of the paper, I draw from the literature of complementarities in firm performance and apply the argument to the problem of stability of ownership structures. In the second part of the paper, I use evidence from management interviews and employee questionnaire from six Estonian enterprises with employee ownership