Abstract: Three factors, resource, capacity, competence, which effects on long performance of enterprises are analyzed, and a related model is built. On the outcome of above analysis, know-how is the deep and direct factor which affects on long performance of enterprises, and the priority is key know-how, core know-how and standard know-how in turn, and the first should be in house, the second should be collaboration, and the third should be arm-length purchasing. Finally, interaction and case studies are carried out.

Key words: outsourcing, know-how, decision-making, core competence