Entrepreneurship and privatization in Central Europe: The tenuous balance between destruction and creation

What is the best set of privatization policies to release entrepreneurial endeavors in transition economies? Policies of mass privatization in Central Europe were predicated on the belief that private ownership through securitization of property rights would provide powerful incentives for efficient restructuring. In retrospect, the more radical privatization programs not only failed to achieve the expected restructuring but also hindered the development of entrepreneurial activities. In this article we develop four propositions, arguing that entrepreneurship is better fostered through gradualist policies permitting negotiated solutions to restructuring, as opposed to market-driven reforms.