This chapter provides a framework to organize the analysis of interactions among the various factors that affect technological behavior in industry, thus helping to unravel the thread of complex forces that affect the process of innovation in developing countries. There are three sets of factors that ultimately influence technological behavior in a given industrial branch: industrial organization and market structure; type of technology and level of technological capabilities prevailing in the branch; and characteristics of the leading firms in the branch. The general macroeconomic situation prevailing in the country affects the market structures and the behavior of the leading firms in the various branches of industry. Other characteristics of leading firms, such as their organizational structure, degree of “modernity” in their managerial practices, relations with labor unions, and similar aspects, also condition the interest and capacity to undertake innovative activities.