Straddling For Market Space: Transforming Estonian State-Owned Enterprises Toward A Free-Market Orientation

Abstract

This paper examines the dynamics of transformation of three Estonian state-owned enterprises – Eesti Gaas, Eesti Energia and Eesti Telefon - toward a free market orientation following the Estonia’s decision to separate from the USSR. The difficulties of such transformation are first examined from a theoretical perspective. It is argued that organizations attempting such transformation are likely to be stuck in a state of dynamic equilibrium between the old static mode and the emerging free-market mode until some key factor causes it to tip over into one or the other of these modes. Four major transformational challenges - strategic orientation, resource and competency acquisition logic, workforce and organizational configuration - are discussed by examining the dynamics of transformation of three Estonian state-owned enterprises.