PEOPLE.IDEAS.PERFORMANCE

32 First, the goals of the actors can be different as their behavior and preferences may vary due to the different perception of risks. Second, it is difficult or costly for the principal to control the agent. The behavior or the output can be relevant in the contract between the two parties, which is influenced by market uncertainty. In the case of lower uncertainty, the output-based measurement is preferred (Eisenhardt, 1989). The interest in agency theory dates to the 1960s, when, following the spread of nuclear power plants, people anticipated a clean and unlimited energy source but they quickly realized the risk of short-term catastrophes and long-term environmental nuisances. However, the risk perception of people was different from the position of science about nuclear technologies. According to Starr (1969), people are willing to take a thousand times higher risk if they think it is their own decision (e.g. driving a car, starting a new firm), compared to when the environment forces the choice on them (e.g. nuclear power, new forms of taxation). In 1973, Ross described the agent-principal problem with a purely mathematical method, and later Jensen and Meckling (1976) introduced the concept of agency cost, which includes the payments of the agent, as well as the price of controlling. However, describing the operation under real conditions and the factors affecting the relation of the agent and the principal is still an important research question. Early explanations include information asymmetry, but it soon became obvious that people’s personality and attitude are also crucial in terms of risk avoidance. Freudenburg (1993) claims personal recreancy is a much more important factor in risk management than ideological or socio-economic background. Family businesses can be considered risk avoiders, as they risk the wealth and livelihood of the family with their firm, therefore they avoid risky business decisions. At the same time, they are risk seekers in several cases, since their investments are not diversified, their wealth is associated with a single firm (Beatty &Zajac, 1994). They follow a conservative strategy because they aim to maintain a constant level of welfare for the family, which encourages a less risky behavior (Bertrand &Schoar, 2006). Hiebl’s (2012) meta - analysis showed that the willingness of family businesses to take risks can be influenced by several, not yet studied factors and based on the results so far, it is not confirmable that family firms have a more risk avoiding behavior than non-family firms. However, he notes that family businesses spend more on insurance (Hiebl, 2012), which can be a rational choice due to lower diversification (Beatty &Zajac, 1994) and the pursuit of long-term persistence (Miller et al. 2008). Information asymmetry has a major influence in the cases where the level of controllability is lower, such as large-scale R&D investments. However, Gomez-Mejia et al. (2003) points out that the compensation of managers in family businesses is lower than in non-family business in the case of identical R&D investments. They explain it by lower information asymmetry due to stronger bonds between family members. Bartholomeusz and Tanewski (2006) adds that as the welfare of the family and the firm are in strong connection, minimizing agency costs is in the interest of the family members because this way they maximize the profit of the whole family. Other factors can have a strong influence on agency cost as well, which also affects business performance. The performance of family businesses can increase, or even decrease, due to agency cost (Christman et al. 2004). The direction depends mostly on the quality of relationship between family members and the size of the firm, since an increase in size entails the necessity of more distinct roles, resulting in the appearance of agency cost (Karra et al. 2006). If the role of the agent and the principal is not separated formally, agency costs may decrease, but even in this case the agent-principal problem can emerge between family members. Nevertheless, the costs are lower owing to the high level of trust and common values. Agency cost is also in a sharp decline when family members pursuit non-financial