This paper compares how a firm's internal technical expertise and its supplier governance mechanisms, including contractual and relational governance, influence supplier performance, both independently and jointly. The core question is whether inter-firm governance mechanisms can substitute for a firm's internal technical skills in maintaining supplier performance or whether, instead, a firm risks hollowing itself out by de-emphasizing internal expertise when it outsources. The arguments build on the capabilities, inter-organizational governance, and supply management literatures. We find that internal technical expertise influences multiple dimensions of supplier performance, including cooperation, quality, price, delivery, and communication, while contractual governance and relational governance mechanisms have a more focused impact on supplier performance. In turn, combinations of technical expertise, relational governance, and contractual agreements jointly affect several aspects of supplier performance. The study suggests that firms generate superior supplier performance if they retain internal technical skills even as they increase their use of external governance mechanisms to manage buyersupplier relationships.Firms need to ensure that they achieve high performance from their suppliers when they outsource goods and services, where outsourcing means using one or more external vendors to supply goods and services needed for a firm's products. Dell, Nike, Boeing, Embraer, and Toyota produce few of their components internally, for instance, relying heavily on relationships with suppliers to help them achieve industry leadership in price, quality, and responsiveness to changing demands. It is not clear, however, what skills firms require to achieve high supplier performance. Some scholars emphasize interfirm governance mechanisms in helping buyers achieve strong supplier performance, where inter-firm governance mechanisms include using contracts to specify terms and align incentives (Macneil 1978, Williamson 1975 as well as using relational governance mechanisms, such as sharing information and providing performance feedback, to increase commitment and generate common goals (Dyer 1997, Dyer and Singh 1998, Holcomb and Hitt 2007. Other analysts, however, question whether buyers can rely on inter-firm governance mechanisms to ensure satisfactory supplier performance. Instead, as BusinessWeek (1986) This paper studies how a firm's technical expertise and use of governance mechanisms independently and jointly shape five aspects of supplier performance, including price, quality, delivery, communication, and cooperation. The study informs our understanding of what skills firms require for effective supplier management. If governance mechanisms allow firms to substitute supplier expertise for their own skills, then firms might be able to increase their outsourcing activities to the point that they primarily become assemblers of purchased components and services or even pure contractual brokers. If governanc...