Abstract
This work theorizes about the dyadic interplay between the Venture Capitalist (VC) and the Entrepreneur and how these individual-level interactions lead to firm-level outcomes such as internationalization decisions through agency effect mechanisms. We integrate the prospect theory and agency theory to explain when the firms experience agency effects and reduce or enhance their propensity to internationalize. We connote the reference point as the entrepreneurial aspiration to unravel a novel finding about how higher entrepreneurial aspiration (reference point shifting) helps an entrepreneur avoid agency effects of the firm and is more likely to internationalize. We provide several testable propositions and future research directions that can enrich entrepreneurship theory and practice.