IT2-based multidimensional evaluation approach to the signaling: investors’ priorities for the emerging industries

Grounded in the signaling theory, the study aims to develop a model for evaluation of emerging industries. The integrated method is proposed to evaluate the emerging industries with DANP (DEMATEL-based Analytic Network Process) and MOORA (Multi-Objective Optimization on the basis of Ratio Analysis) methodologies based on interval type 2 fuzzy sets, respectively. The application is illustrated by considering cleantech, new generation of information technology, biology/biotechnology and high-end equipment manufacturing industries, three dimensions and 12 criteria. The novelties of the study lie in a set of criteria and alternatives for the signaling in emerging industries supported by the literature and suggest a hybrid decision-making model based on the type 2 fuzzy sets. The signaling determinants for emerging industries could be evaluated by the proposed interval type 2 hybrid decision-making approach more accurately. The results demonstrate that the firms, operating in emerging industries at the early stage of their development, have to put emphasis on the third-party endorsements and human capital criteria, aiming to attract external investors. The suggested method lets the external investors narrow their options in selecting emerging industries and select the most attractive industries or spread investments among the most attractive industries.

[1]  M. Spence.  Job Market Signaling , 1973 .

[2]  David A. Kirsch,et al.  The study of emerging industries: Recognizing and responding to some central problems , 2011 .

[3]  Edmundas Kazimieras Zavadskas,et al.  Multi‐objective decision‐making for road design , 2008 .

[4]  Lowell W. Busenitz,et al.  Signaling and initial public offerings: The use and impact of the lockup period , 2009 .

[5]  David L. Deeds,et al.  The Influence of Firms’ and Industries’ Legitimacy on the Flow of Capital into High-Technology Ventures , 2004 .

[6]  Dan Prud'homme,et al.  Dynamics of China’s provincial-level specialization in strategic emerging industries , 2016 .

[7]  Edmundas Kazimieras Zavadskas,et al.  The MOORA method and its application to privatization in a transition economy , 2006 .

[8]  Hasan Dinçer,et al.  Profit-based stock selection approach in banking sector using Fuzzy AHP and MOORA method , 2015 .

[9]  Fabrizio Maturo,et al.  Do Institutional or Foreign Shareholders Influence National Board Diversity? Assessing Board Diversity Through Functional Data Analysis , 2017 .

[10]  Gwo-Hshiung Tzeng,et al.  The best vendor selection for conducting the recycled material based on a hybrid MCDM model combining DANP with VIKOR , 2012 .

[11]  Cengiz Kahraman,et al.  Fuzzy analytic hierarchy process with interval type-2 fuzzy sets , 2014, Knowl. Based Syst..

[12]  Bernard C. Y. Tan,et al.  The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China , 2018 .

[13]  Adam R. Fremeth,et al.  Signaling by early stage startups: US government research grants and venture capital funding , 2018 .

[14]  David H. Hsu.  Experienced entrepreneurial founders, organizational capital, and venture capital funding , 2007 .

[15]  Alexander McKelvie,et al.  Signaling for more money: The roles of founders' human capital and investor prominence in resource acquisition across different stages of firm development , 2018, Journal of Business Venturing.

[16]  Dinçer Hasan,et al.  Performance Assessment of Deposit Banks with CAMELS Analysis using Fuzzy ANP-MOORA Approaches and an Application on Turkish Banking Sector , 2016 .

[17]  Guoli Chen,et al.  How much prestige is enough? Assessing the value of multiple types of high-status affiliates for young firms , 2010 .

[18]  Ravi Shankar,et al.  Selection of logistics service provider: An analytic network process (ANP) approach , 2007 .

[19]  S. Trevis Certo,et al.  IPO Research in Management and Entrepreneurship: Moving the Agenda Forward , 2009 .

[20]  J. Pennings,et al.  Internal capabilities, external networks, and performance: a study on technology‐based ventures , 2001 .

[21]  Tyzoon T. Tyebjee,et al.  A Model of Venture Capitalist Investment Activity , 1984 .

[22]  Sanjay Goel,et al.  Interplay between reputation and growth: the source, role and audience of reputation of rapid growth technology-based SMEs , 2017 .

[23]  Brian L. Connelly,et al.  Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital , 2016 .

[24]  Rudolf Urban,et al.  A new operational risk assessment technique: the CASTL method , 2013 .

[25]  Antoaneta P. Petkova,et al.  Reputation and Decision Making Under Ambiguity: A Study of US Venture Capital Firms' Investments in the Emerging Clean Energy Sector , 2011 .

[26]  Andrew J. Ward,et al.  Certifications and Reputation: Determining the Standard of Desirability Amidst Uncertainty , 2010, Organ. Sci..

[27]  Megan J. MacGarvie,et al.  Patents, Thickets and the Financing of Early-Stage Firms: Evidence from the Software Industry , 2007 .

[28]  David B. Audretsch,et al.  Financial signaling by innovative nascent ventures: The relevance of patents and prototypes , 2012 .

[29]  Brian L. Connelly,et al.  Signaling Theory: A Review and Assessment , 2011 .

[30]  Shyi-Ming Chen,et al.  Fuzzy multiple attributes group decision-making based on the extension of TOPSIS method and interval type-2 fuzzy sets , 2008, 2008 International Conference on Machine Learning and Cybernetics.

[31]  Donald O. Neubaum,et al.  The Effect of Virtuous and Entrepreneurial Orientations on Microfinance Lending and Repayment: A Signaling Theory Perspective , 2015 .

[32]  Jonathan Levie,et al.  Founder's human capital, external investment, and the survival of new high-technology ventures , 2010 .

[33]  Gwo-Hshiung Tzeng,et al.  A new hybrid MCDM model combining DANP with VIKOR to improve e-store business , 2013, Knowl. Based Syst..

[34]  Gwo-Hshiung Tzeng,et al.  Exploring smart phone improvements based on a hybrid MCDM model , 2014, Expert Syst. Appl..

[35]  Peigen Li,et al.  Toward New-Generation Intelligent Manufacturing , 2018 .

[36]  Paul A. Gompers,et al.  Performance persistence in entrepreneurship , 2010 .

[37]  Fabrizio Maturo,et al.  Measuring and monitoring diversity in organizations through functional instruments with an application to ethnic workforce diversity of the U.S. Federal Agencies , 2019, Comput. Math. Organ. Theory.

[38]  Lars Coenen,et al.  Sustainability transitions in the making: A closer look at actors, strategies and resources , 2012 .

[39]  E. Zavadskas,et al.  The Interval-Valued Intuitionistic Fuzzy MULTIMOORA Method for Group Decision Making in Engineering , 2015 .

[40]  Edmundas Kazimieras Zavadskas,et al.  Fuzzy multiple criteria decision-making techniques and applications - Two decades review from 1994 to 2014 , 2015, Expert Syst. Appl..

[41]  K Hasilová,et al.  Impact of the Financial Crisis of 2008 on Furniture Industry in the Czech Republic and Development of Tangible Fixed Assets in 2005– 2012 and its Possible Renewal , 2016 .

[42]  Anders Billström,et al.  Reveal or Conceal? Signaling Strategies for Building Legitimacy in Cleantech Firms , 2017 .

[43]  D. Valis,et al.  Mathematical analysis of soot particles in oil used as system state indicator , 2016, 2016 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM).

[44]  David Valis,et al.  Non-parametric estimates of the first hitting time of Li-ion battery , 2018 .

[45]  Igor Filatotchev,et al.  Founders, Private Equity Investors, and Underpricing in Entrepreneurial IPOs , 2009 .

[46]  Janet M. Dukerich,et al.  Unmixed signals: How reputation and status affect alliance formation , 2014 .

[47]  A. Rebecca Reuber,et al.  The Company You Keep: How Young Firms in Different Competitive Contexts Signal Reputation through Their Customers , 2005 .

[48]  Manuela N. Hoehn-Weiss,et al.  Unpacking Functional Alliance Portfolios: How Signals of Venture Viability Affect New-Venture Outcomes , 2014 .

[49]  Wen Lea Pearn,et al.  Analytic network process (ANP) approach for product mix planning in semiconductor fabricator , 2005 .

[50]  Joel A. C. Baum,et al.  Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups , 2004 .

[51]  D. Bosse,et al.  Strategic Alliances of Entrepreneurial Firms: Value Enhancing Then Value Destroying , 2016 .

[52]  Crystal X. Jiang,et al.  An Empirical Study of the Impact of CEO Characteristics on New Firms' Time to IPO* , 2011 .

[53]  Min Liu,et al.  A novel performance evaluation model for MRO management indicators of high-end equipment , 2019, Int. J. Prod. Res..

[54]  A. Rao,et al.  No Pain, No Gain: A Critical Review of the Literature on Signaling Unobservable Product Quality , 2000 .

[55]  Chamu Sundaramurthy,et al.  Positive and negative synergies between the CEO's and the corporate board's human and social capital: : A study of biotechnology firms , 2014 .

[56]  K. E. Thurley,et al.  THE SUPERVISOR'S ROLE IN PRODUCTION CONTROL , 1961 .

[57]  Paula E. Stephan,et al.  Conveying Quality and Value in Emerging Industries: Star Scientists and the Role of Learning in Biotechnology , 2008 .

[58]  M. Colombo,et al.  Signaling in science-based IPOs: The combined effect of affiliation with prestigious universities, underwriters, and venture capitalists , 2019, Journal of Business Venturing.

[59]  C. Haeussler,et al.  How patenting informs VC investors - The case of biotechnology , 2014 .

[60]  Pavel Otřísal,et al.  The Development and Establishment Process of Centres of Excellence in North Atlantic Organization , 2012 .

[61]  Kuechle Graciela,et al.  Prediction‐ and Control‐Based Strategies in Entrepreneurship: The Role of Information , 2016 .

[62]  Renata Korsakienė,et al.  IT2 Hybrid Decision-Making Approach to Performance Measurement of Internationalized Firms in the Baltic States , 2019, Sustainability.

[63]  Sean Nicholson,et al.  Biotech-Pharmaceutical Alliances as a Signal of Asset and Firm Quality , 2002 .

[64]  J. Henkel,et al.  Quality Signals? The Role of Patents, Alliances, and Team Experience in Venture Capital Financing , 2014 .

[65]  Shouzhen Zeng,et al.  Group multi-criteria decision making based upon interval-valued fuzzy numbers: An extension of the MULTIMOORA method , 2013, Expert Syst. Appl..

[66]  Andreas Köhn,et al.  The determinants of startup valuation in the venture capital context: a systematic review and avenues for future research , 2018 .

[67]  Curt B. Moore,et al.  Signaling Organizational Virtue: an Examination of Virtue Rhetoric, Country‐Level Corruption, and Performance of Foreign IPOs from Emerging and Developed Economies , 2013 .

[68]  J. Liou,et al.  An outsourcing provider decision model for the airline industry , 2013 .

[69]  Shyi-Ming Chen,et al.  Fuzzy multiple attributes group decision-making based on the interval type-2 TOPSIS method , 2010, Expert Syst. Appl..

[70]  Sabrina T. Howell.  Financing Innovation: Evidence from R&D Grants , 2016 .