Technology measurement is related with how to construct indicators of technological change and relative ranking of technological sophistication. Many attempts have been made to understand the measurement of technology and, as a result, various approaches of the measurement were developed and employed for the empirical studies. However, technology measurement still remains little understood problem in spite of its importance.
This thesis is concerned with improving the measurement of technology by introducing market factors into the model. The purpose of this study is to illustrate a simple approach to the measurement of technology. This approach is based on the characteristics-space paradigm of technology. A relative ranking of technological sophistication for a product is measurable as a set of characteristics.
The main feature of the proposed approach is the combination of technical factors and market factors. Technical factors are reflected in the definition of technological sophistication. Market factors are embraced in the determination of the relative importances assigned to each characteristic defining the technology. In the previous studies, the weight was determined by experts' opinions. This judgemental technique may lose its credibility and precision, and consequently will be hard to be tested for its objective validity. In this study, the weight is determined by technical factors and market factors, which differentiates the study from the past study.