The Treuhandanstalt: Taking a Nation Private

Abstract:
The dramatic merger of the former East and West Germanys led to an historic mission for a new agency: the sale to private buyers of the vast assets of the former East Germany. The agency created for the purpose was the Treuhandanstalt, conceived originally as a narrowly defined financial concern dedicated to assessing the value of property and expeditiously arranging its sale. When the agency unexpectedly found itself caught in the eye of a much larger political storm, it had to decide to what extent it had a role in serving social welfare as well as privatization purposes--and, how best to achieve the goals inherent in each. The issues were joined when it became clear that Treuhand actions would put many thousands of East Germans out of work and that there were not buyers for many concerns. The case frames a decision point around the issue of whether the Treuhand should simply allow unprofitable businesses to fail, or whether it should heed calls to establish a new type of state agency to continue to offer employment to residents of the former East Germany. The case raises issues about how to assess an organization's mission and when and if to change course.

Learning Objective:
The case frames a decision point around the issue of whether the Treuhand should simply allow unprofitable businesses to fail, or whether it should heed calls to establish a new type of state agency to continue to offer employment to residents of the former East Germany. The case raises issues about how to assess an organization's mission and when and if to change course.