Abstract The present thesis analyses different software supplier types and the development of supplier firms in the context of the Finnish ICT cluster, which underwent rapid growth in the 1990s. The central brand-owner firms in the cluster have been accompanied by a high number of smaller industrial supplier firms that base their business on serving their large customer organisations. The research to date on the ICT cluster has largely focused on understanding the development and purchasing strategies of the large customer firms and thus does not provide a sufficient basis for understanding how supplier firms in the cluster operate and develop. It is this gap that the present study undertakes to address. The thesis begins by building a theoretical framework that identifies the main factors affecting the development of industrial supplier firms. The inner context of the framework is based on the resource-based view of the firm and the capability approach, while the outer context rests on principles drawn from theories of evolutionary economics. Supplier development is analysed as a change from one firm type to another. The empirical part of the thesis consists of a quantitative and a qualitative study. The former identifies five software supplier types and elaborates a typology capturing their main features, e.g., key resources, capabilities and operating logic. The latter then applies the theoretical framework in analysing the development of four software supplier firms within the ICT cluster. The empirical analysis generates a number of propositions on the development of software supplier firms that together constitute a description of the firms' typical development path and the most significant resources and capabilities enabling the development identified. The software suppliers' change from providing customised software services towards independent production of software products was found to be extremely difficult. The thesis concludes with a discussion of strategy-level choices that are relevant in managing this type of development.