PEOPLE.IDEAS.PERFORMANCE

40 1998). It can easily lead to a more risk-taking behavior to minimize possible losses in an uncertain situation. Instead of constant risk attitudes, behavioral agency model emphasizes the importance of the framing effect (Tversky&Kahneman, 1986), which states that different variables affect whether the agent considers the potential loss or potential win in the decision. The key factors in the relationship of the agent and the principal are intrinsic and extrinsic motivations, the extent of loss, risk and uncertainty avoidance, temporal discounting, avoidance of inequity and setting goals, instead of efficiency and profit maximization (Pepper & Gore, 2015). In relation to family businesses, Lim, Lubatkin and Wiseman (2010) describe how the different types of altruism affect the extent of risk taking. Nevertheless, the effect of the way parental, paternalist and psychosocial altruism moderate risk taking may vary depending on the structure and size of the family. Parental altruism is defined similarly to nepotism. Paternalist altruism focuses on the transfer of merit goods instead of ensuring material goods. The parent offers the descendant to replace him/her as a successor. Paternalist parents consciously try to direct their descendants in a direction they consider good. Finally, psychosocial altruism covers the parental behaviors through which the child is socialized. Lim et al. (2010) provide a detailed description about the behaviors related to the three types of altruism and their effect on risk taking, but despite their convincing arguments, it needs to be recognized that their model is merely theoretical. Behavioral agency theory in general includes even more theory and less empirical confirmation (Pepper & Gore, 2015). However, it is popular in family business research owing to the work of Gomez-Mejia et al. (2007, 2014), who explain the behavior related to the management of socio-emotional wealth with this theory. Family businesses are interested in preserving their socio-emotional wealth, which is not measurable in monetary terms, but it includes the social and emotional benefits resulting from the family management of the firm. This can appear in three different ways in behavior: with keeping the ownership and control in the hand of the family, with nepotism, and with building the reputation of the family. While good reputation has usually a positive effect on performance, adherence to control and nepotism can be the source of many problems (Naldi et al. 2013). Accordingly, family firm managers do not give a primary consideration to business efficiency but they will decide to avoid losses related to socio-emotional wealth, even at the expense of risking firm performance. In decision-making, socio-emotional wealth is a primal reference point in most cases (Naldi et al. 2013). Socio-emotional wealth is not only present in the business world but also closely connected to family life, which family members cannot hide from (Berrone, Cruz & Gomez- Mejia, 2012). It can also affect non-family employees if the feeling of psychological ownership emerges, as we have described it above. Berrone et al. (2012) claim that this is the core of the difference between family and non-family firms, as this type of strong connection between family and work life can only exist in family firms. The decisions of family businesses become more understandable based on behavioral agency theory. Berrone et al. (2012) summarize many empirical studies in their paper, where the preservation of socio-emotional wealth level as a reference point influences the decisions of family businesses. They also describe the situation when a decline in firm performance jeopardizes the existence of the firm. In this case, the aspiration level of socio-emotional wealth can change and families are able to focus on business interests in the short term. Chrisman and Patel’s (2012) empirical study also confirmed that family businesses tend to spend more on R&D in commercially challenging periods. Behavioral agency theory is able to manage the emergence of self-interested and self- advocate behaviors, but at the same time it can address the close emotional bonds affecting the management of family businesses. It describes the operation of the idiosyncratic resource