Technological innovation is one of the most important sources of corporate and industrial growth. Yet, we know notably little of the relationship between innovation and economic change. Knowledge about the interaction between technological innovation and social action is suggested to be essential in the formulation of public and business policies concerning technological development. In this dissertation technological innovation is set into the context of industrial networks, here perceived as technological systems and networks of exchange relationships. The focus is upon the emergence of a technological system, digital image technology, and evolution of new patterns of interaction between actors, research organizations, established firms, new ventures and public institutions developing, producing, applying and promoting the new technology. The study of the development of digital image technology in Sweden between 1965 and 1989 shows that the emergence and the evolution of new industrial networks can be treated as three parallel processes; genesis – identification, coalescence – legitimation and dissemination – adaption, each dominating in different periods of time. Quantitative network analysis of the emerging patterns of interaction is used to analyze the changing structure of the Swedish image processing network resulting from these three evolutionary processes. The analysis reinforces the proposed framework for the understanding of the emergence of an industrial network.