PEOPLE.IDEAS.PERFORMANCE

33 goals. Such example is knowledge transfer to the next generation, where the controllability over the selection of successors is lower than in non-family businesses. Another example for pursuing a non-financial goal is when the family employs a non-productive relative to ensure their livelihood. For such cases, even if agency cost is lower compared to a non-family business, firm performance also decreases (Christman et al. 2004). In the case of family conflict, agency cost rises rapidly because „firing” a relative is rarely an option. If goals and values are different, family members may become each others’ competition for strategic control. Different interests often emerge between family members who are related to the firm in different ways (Dyer, 2006). According to Gomez-Mejia et al. (2001), business performance increases in such cases if the management of the family business is replaced by professional outsiders. The agent-principal problem entails considerable costs when family members show altruistic behavior. In the present paper, altruism is understood as helping someone for who they are, and not because of their behavior. Altruism decreases the effectiveness of control, as stated by Greenwood (2003). Family members can trust in altruistic leader behavior even if they act in a different way than the superior expects. It results in a decrease in the efficiency of the management. Schultze et al. (2003) concluded that the problems of altruism can be reduced by the development of a certain management hierarchy within the family. If the roles and processes are well defined, altruism is less needed, but, at the same time, agency cost increases because of more control. Without these, however, family stowaways may appear, and detecting them can be hindered by the subjectivity of parental perception. Agency cost is usually very low or is not measurable in the early stage of the family business, at the time of the first generation. More and more actors appear with the growth of the nuclear family and the firm, which also involves the agent-principal problem. This continues to intensify when nepotism is the base of succession. If the successor is less suitable for the management job, the value of the firm decreases. This decline can be also defined as agency cost (Herrero, 2011). Whether the successor selection is not ideal because of nepotism (Lubatkin et. al. 2007), or the aging founder’s waning management performance influence the performance of the firm in a negative way (Shleifer &Vishny, 1989), family businesses still tend to keep management in family hands to minimize agency costs. This is the so-called entrenchment phenomenon, which promises much more loss of profit due to lacking management competences than the amount saved by lower agency cost (Herrero, 2011). 7+( &$6( 678'< 2) $ )$0,/< %86,1(66 The family business of the case study is an Ltd engaged in tourism. It was established at the end of 1993 with 5 million HUF share capital. They closed the year of 2014 with 18 million HUF equity capital, which, considering the 493.5 per cent inflation having occurred since then means that although the existing capital increased in nominal terms, its real value decreased approximately to its three quarters. This loss is compensated by the tangible assets estimated to about 20 million HUF available for the firm. This is a considerable development compared to some pieces of furniture available at the time of the foundation, which A.X. referred to while describing the firm history. With about 20 employees and a turnover of 1 billion HUF, the firm can be categorized as a small enterprise.