Does employee ownership survive the transition? Case Study Evidence from Estonia

Kalmi, Panu (2002) Does employee ownership survive the transition? Case Study Evidence from Estonia. Acta Oeconomica, 52 (3). pp. 307-325. ISSN 0001-6373

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Abstract

Privatisation to employees has been common in Estonia and in other transition economies, but some evidence suggests that employee ownership is declining. In this paper, I use the concept of “degeneration” from the literature of worker co-operatives to explain this 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 questionnaires taken at six Estonian enterprises with employee ownership. The evidence suggests that employee ownership is rapidly declining in Estonia. The main reason for the decline is that ownership is not extended to new employees.

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