過去的文獻成功地運用不完全契約，解釋低資本密集的產業偏向採用外包合作而非垂直整合。然而，不完全契約理論卻忽略外包接單廠商自身的研發行為，尤其是在接單競爭被強化時。因此，我們延伸不完全契約模型，發現若接單廠商身處越資本密集的產業，越能從上游廠商奪取利潤，因此有更強的誘因從事研發活動。當接單競爭強化時，我們發現低資本密集的產業較不願意從事研發活動，甚至被市場淘汰，所以可以看到生產活動逐漸高資本密集的廠商或產業集中。另外我們利用計量模型驗證文章中的結論，並得到一致的結果。

Previous study utilizes incomplete contracts theory to explains why industries with lower capital intensity adopt outsourcing policy instead of vertical integration. However, incomplete contracts is silent in explaining foreign supplier's R&D activities, especially when the competition is intensified. We extend the incomplete-contracting model, and discover that foreign supplier of higher capital intensity producer has a higher profit extracted from final-good producers. Such excess profit gives foreign supplier more incentive to engage in R&D activities. When competition is intensified, we also show that suppliers of less capital intensive producer spend less in R&D or may leave the market; therefore within an industry, factors are reallocated to suppliers of capital-intensive producers or toward suppliers in capital intensive
industries. Econometric evidence we provide supports the prediction of the model.

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