Based on qualitative interviews with members of a focal firm located in China and five of its local supplier firms, and on non-participant observations of focal firm-supplier transactions, we identify the cooperative and competitive routines that were managed and orchestrated by the focal firm and contributed to local knowledge development through Yin-Yang dynamics. Harnessed together in Yin-Yang dynamics, these two contradictory yet complementary and mutually transformative routines drove and supported core suppliers’ active contributions to new knowledge development while challenging them to remain close to the focal firm.