Citing case studies based on interviews they conducted in 1991 and 1992 with labor representatives and managers at six eastern German manufacturing firms, the authors argue that the future could hold either vigor and growth or stagnation and permanent second-class status for the economy and labor movement in eastern Germany, depending largely on actor strategy and choice. The rapid spread of privatization and open markets is tending to undermine unions' influence, on the one hand; but on the other hand, institutional transfer from former West Germany (especially of codetermination law and centralized, regional-level collective bargaining) is giving unions and works councils increased possibilities for leverage.