The study aims to bridge the gap in literature by establishing the connection between corporate entrepreneurship and agency cost. It also examines the moderating role of agency cost on the relationship between corporate entrepreneurship and firm performance, to validate whether in the presence of agency cost the corporate entrepreneurship yields high profit or not. Beginning with theoretical background of corporate entrepreneurship and agency cost, this study proposes a model to test, empirically, the relationship between corporate entrepreneurship and agency cost. The findings highlight the significant negative relationship between corporate entrepreneurship and agency cost, while no moderating impact of agency cost has been found on the link between corporate entrepreneurship and firm performance.It also presents that the impact of corporate entrepreneurship is more negatively significant on agency cost reflecting that corporate entrepreneurship can act as an excellent technique in reducing agency problems within organizations that leads to high performance.

is a PhD Scholar at International Islamic University, Islamabad, Pakistan, doing PhD thesis.The author has two and half years teaching experience and one year experience in Ministry of Finance, Islamabad respectively. Moreover, she presented her paper at the 2011 Academy of Management Annual Meeting, on 12-16 August, 2011 at San Antonio, USA