A decision making model for selecting start-up businesses in a government venture capital scheme
ISSN: 0025-1747
Article publication date: 18 April 2016
Issue publication date: 18 April 2016
Abstract
Purpose
The purpose of this paper is to propose an intuitionistic fuzzy technique for order preference by similarity to ideal solution (TOPSIS) multi-criteria decision making method for the selection of start-up businesses in a government venture capital (GVC) scheme. Most GVC funded start-ups fail or underperform compared to those funded by private VCs due to a number of reasons including lack of transparency and unfairness in the selection process. By its design, the proposed method is able to increase transparency and reduce the influence of bias in GVC start-up selection processes. The proposed method also models uncertainty in the selection criteria using fuzzy set theory that mirrors the natural human decision-making process.
Design/methodology/approach
The proposed method first presents a set of criteria relevant to the selection of early stage but high-potential start-ups in a GVC financing scheme. These criteria are then analyzed using the TOPSIS method in an intuitionistic fuzzy environment. The intuitionistic fuzzy weighted averaging Operator is used to aggregate ratings of decision makers. A numerical example of how the proposed method could be used in GVC start-up candidate selection in a highly competitive GVC scheme is provided.
Findings
The methodology adopted increases fairness and transparency in the selection of start-up businesses for fund support in a government-run VC scheme. The criteria set proposed is ideal for selecting start-up businesses in a government controlled VC scheme. The decision-making framework demonstrates how uncertainty in the selection criteria are efficiently modelled with the TOPSIS method.
Practical implications
As GVC schemes increase around the world, and concerns about failure and underperformance of GVC funded start-ups increase, the proposed method could help bring formalism and ensure the selection of start-ups with high potential for success.
Originality/value
The framework designs relevant sets of criteria for a selection problem, demonstrates the use of extended TOPSIS method in intuitionistic fuzzy sets and apply the proposed method in an area that has not been considered before. Additionally, it demonstrates how intuitionistic fuzzy TOPSIS could be carried out in a real decision-making application setting.
Keywords
Acknowledgements
This work was supported by Grant Agency of the Czech Republic – GACR P103/15/06700S, further by financial support of research project NPU I No. MSMT-7778/2014 by the Ministry of Education of the Czech Republic and also by the European Regional Development Fund under the Project CEBIA-Tech No. CZ.1.05/2.1.00/03.0089. Further, this work was supported by Internal Grant Agency of Tomas Bata University under the project No. IGA/FAI/2015/054.
Citation
Afful-Dadzie, E. and Afful-Dadzie, A. (2016), "A decision making model for selecting start-up businesses in a government venture capital scheme", Management Decision, Vol. 54 No. 3, pp. 714-734. https://doi.org/10.1108/MD-06-2015-0226
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited