Many universities are transforming themselves from single mode on-campus universities to dual mode universities after recognizing the importance of providing online education programs and the kinds of opportunities they offer. These universities often have their faculty work with instructional designers (ID) in-house or at times outsource online course development to an Online Program Management (OPM) provider. The ID process involves course development where faculty and instructional designer (ID) work together to build the online course. A gap exists in the literature around how faculty interact with such IDs provided by OPMs and what impact the ID process has in their teaching design, and their pedagogical knowledge and development. This research uses a Case Study to analyze how the nature and dynamics of the ID process in a business partnership between a research university and an OPM provider influence faculty. This case study included a private research university that had recently joined a partnership with an Online Program Management Provider (OPM) to develop and offer online Master's degree programs. The Activity Theory conceptual framework was used to direct inquiry and analysis. Results show that the impact on faculty pedagogical knowledge and development is different for each faculty and is dependent on faculty assumptions, personality, attitudes, training in pedagogy and technology, and past online teaching experiences. A learning mindset from the faculty side is very important to get the best of this relationship. This research supports e-learning practice by guiding that faculty should not be participating just due to the pressure by their upper-level management but because they really want to teach online. Faculty should be ready to check their own assumptions and knowledge they have about pedagogy before getting into this process. This study is a novel approach to understand the impact on faculty teaching design using Activity Theory framework. It shows how Activity Theory could be a useful technique to solve problems in e-learning research and practice.