Unveiling the Value of Technology: A Utility Theory Framework and Its Application in Technology Startups


Technology is crucial for strategic success, and the valuation of technology is necessary for a firm’s financial and accounting practices, strategic decision-making, and risk management. Although there have been valuable studies examining the impact of individual factors on the value of a technology, we still lack a comprehensive and systematic understanding of the determinants of the economic value of patented technologies. This article proposes a utility theory of technology value, which argues that the economic value of patented technology is determined by the utility that technology provides and is shaped by four intrinsic attributes: the usefulness of a technology and related market size, the quality of the technology, the enabling environment to deliver the utility, and risk and risk management. This valuation framework provides a valuable theoretical foundation for researchers and practitioners to use in future technology valuation.