This dissertation analyzes how changing conditions in the global economy affect the development of latecomer firms. In particular, it analyzes how latecomer firms respond to and effectively manage technological change and the organizational decomposition of innovation. The thesis is positioned at the intersection of innovation and development studies, rooted in evolutionary economics. It specifically addresses the literature on catching up, technological learning, and the upgrading of innovation capabilities. Drawing on the empirical case of latecomer firms in China’s wind energy sector, the overarching research question guiding this thesis is: what consequences do technological change and the decomposition of innovation have for the upgrading of innovation capabilities in latecomer firms? The motivation for this research question is based on the observation that existing studies do not provide an adequate explanation of changing upgrading dynamics (i.e., trajectories, opportunities, and mechanisms) in the face of recent technological change, especially in relation to the green and digital transformation. Specifically, the current literature on latecomer development reveals three significant gaps. First, there is no integrated perspective that evaluates catching up using both market and technology indicators, in particular to assess technological novelty and impact. Second, there is little understanding on why latecomer firms under the same framework conditions develop different levels of innovation capabilities, particularly in the face of new technologies. Third, there are insufficient systematic studies on the coevolution of upgrading mechanisms and R&D networks, in particular when firms reach higher levels of innovation capabilities and increase their global innovation space. To address these gaps and answer the research question, the dissertation employs a mixed methods approach across multiple case studies. To develop an in-depth understanding of the changing nature of latecomer firm upgrading in emerging economies, this thesis establishes a multi-angle view across three perspectives, each of which is represented in one article. The first article examines catch-up trajectories across countries and sectors and identifies potential catch-up traps. It finds that effective upgrading requires latecomer firms to align their catch-up trajectories with country-specific factor endowments and sector-specific technology cycles. The second article investigates latecomer firm responses to technological change in the wind sector vis-à-vis incumbent firms. It concludes that latecomers under the same framework conditions have different capabilities in responding to technological shifts, highlighting the role of dynamic capabilities at firm level beyond the institutional environment. The third article focuses on the changing properties of R&D networks of lead firms in China’s wind energy sector and identifies new forms of upgrading mechanisms that have not been captured by the extant literature. It determines that latecomer firms adopt new upgrading mechanisms to varying degrees, which explains their different levels of innovation capabilities. The findings build on 18 months of field research in China, including 81 interviews, 23 participant observations, and analysis of over 400 archival records and six databases. Building on the theoretical and empirical findings, the dissertation advances our understanding of latecomer development in an era of technological change. Specifically, it makes the following key contributions: first, it develops an integrated market-technology framework that allows for a differentiated evaluation and holistic understanding of catching up. Second, it conceptualizes technology shifts as significant events for latecomer firm upgrading that, together with firm responses, explain variations in catch-up trajectories under the same framework conditions. Third, it identifies externalized R&D projects as new upgrading mechanisms to acquire high levels of innovation capabilities, ascertaining that latecomer firms do not only exploit but increasingly co-create knowledge through organizational diversification. In addition to these specific contributions, the thesis speaks to the broader debates on economic development, technological progress, and industrial upgrading in emerging market firms and argues that significant synergies exist between the green and digital transformations, and latecomer development.