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Given that Information Technology(IT) is fundamental to a firm’s survival and growth, firms face the critical challenge of integrating, building, and reconfiguring IT resources so as to obtain competitive advantage and superior performance. Many of IT research have separately focused on the effects of internal and external IT governance. However, few studies investigated the alignment between internal and external IT governance and its effect on firm performance. To address this research gap, this study identifies internal and external IT governance types based on prior literature, proposes three optimal alignments between both types of IT governance, and hypothesizes their effects on firm performance. The proposed hypotheses are then empirically tested using 142 Korean firms that have implemented IT outsourcing. Results show that a centralized-based alignment(i.e., centralized and independent), a decentralized-based alignment(i.e., decentralized and arm's-length), and a hybrid-based alignment(i.e., hybrid and embedded) lead to the highest firm performance. This study offers requisite guidance to practitioners in choosing outsourcing alignments by conducting a holistic analysis of the effects of various alignments on firm performance.