This paper attempts to explain the process of institutional transition of post-communist countries applying conceptual framework proposed by D.C. North, J. J. Wallis, and B. R. Weingast. The first part of the article is devoted to outline the theory of North, Weingast, and Wallis. The second part the theory is used to analyze transformation processes in post-communist countries. An important conclusion of this paper is that cultural, religious and historical factors have crucial impact on formation of new coalitions of elites in the transitions countries. In the countries where Western values were present the transfer of the market and democratic formal institutions was easier. Also, the process of transformation was strongly influenced by external factors, especially the prospect of integration with the European Union, which encouraged elites to take action that benefited the opening of both political and economic markets. These observations suggest that, in general, the success of transformation in transition countries did not depend on the intentional actions of ruling elites.