Abstract
We have developed a model to investigate the technology innovation effects of increased outsourcing of production on a low cost region. Increase in profits and reduction in the resource requirement by adapting related innovation could spur the increase of outsourcing. Firms in lower cost region can develop the capacity of innovation through dasialearning by doingpsila and even investment in R&D during this course. But risks, like information leakage, occur. We have analyzed the risks adopting trusting partners within a system relying on the social control dasias perspective. Finally we have discussed some vital measures that managers can take to attempt to control these risks.