Hyunwoo Park

What makes a technology valuable? Characterizing the value as the degree of impact on subsequent technology development and focusing on the rareness as a composite measure of novelty and conventionality representing the relative position of a technology in a technology space, we advance a theory on the relationship between the rareness and value of a technology as well as the moderating role of search basis in shaping the relationship. We build our theory exploiting the fundamental trade‐off between the benefits of adopting a rare technology in pursuing greater recombinant potential and the costs of understanding the rare technology to be adopted and finding complementary technologies for successfully integrating the rare technology in the subsequent technology development process. Using US firm patent data in nanotechnology, we find that the relationship between the rareness and value of a technology exhibits an inverted‐U shape, consistent with our theoretical expectation. Further, the search basis of the focal technology moderates this relationship such that the rareness–value relationship becomes steeper when the technology is built on more local knowledge but flatter if the technology embeds more mature knowledge. Our study contributes to the extant literature seeking to illuminate the process by which valuable technologies arise.