Risk Evaluation of Dynamic Alliance Based on Fuzzy Analytic Network Process and Fuzzy TOPSIS

Affiliation(s)

Dongling School of Economics and Management, University of Science and Technology Beijing, Beijing, China.

Department of Electrical and Computer Engineering, Texas A&M University, College Station, USA..

Dongling School of Economics and Management, University of Science and Technology Beijing, Beijing, China.

Department of Electrical and Computer Engineering, Texas A&M University, College Station, USA..

ABSTRACT

Dynamic alliance formations have increased dramatically over the past decade for its adaptation to environmental change and market competition. However, many fail, while an even greater proportion perform poorly. The risk analysis of dynamic alliance will help enterprises to choose a coalition partner and make a reasonable benefit allocation plan. It’s also good for reducing the risk and keeping the stability of the alliance. Based on the interaction and feedback relationships between criteria and/or indices, an index system for evaluating the risk of dynamic alliance is developed. With the information uncertainty and inaccuracy being considered, a new hybrid model based on fuzzy analytic network process (FANP) and fuzzy technique for order performance by similarity to ideal solution (TOPSIS) is proposed. The local weights of criteria and indices are obtained by fuzzy preference programming (FPP), and the comprehensive weights are derived by FANP. According to fuzzy TOPSIS, an optimal alternative is chosen by the closeness coefficient based on the shortest distance from the positive and the farthest distance from the negative ideal solutions. Finally, a numerical case is given by the proposed method.

Dynamic alliance formations have increased dramatically over the past decade for its adaptation to environmental change and market competition. However, many fail, while an even greater proportion perform poorly. The risk analysis of dynamic alliance will help enterprises to choose a coalition partner and make a reasonable benefit allocation plan. It’s also good for reducing the risk and keeping the stability of the alliance. Based on the interaction and feedback relationships between criteria and/or indices, an index system for evaluating the risk of dynamic alliance is developed. With the information uncertainty and inaccuracy being considered, a new hybrid model based on fuzzy analytic network process (FANP) and fuzzy technique for order performance by similarity to ideal solution (TOPSIS) is proposed. The local weights of criteria and indices are obtained by fuzzy preference programming (FPP), and the comprehensive weights are derived by FANP. According to fuzzy TOPSIS, an optimal alternative is chosen by the closeness coefficient based on the shortest distance from the positive and the farthest distance from the negative ideal solutions. Finally, a numerical case is given by the proposed method.

Cite this paper

X. Zhou and M. Lu, "Risk Evaluation of Dynamic Alliance Based on Fuzzy Analytic Network Process and Fuzzy TOPSIS,"*Journal of Service Science and Management*, Vol. 5 No. 3, 2012, pp. 230-240. doi: 10.4236/jssm.2012.53028.

X. Zhou and M. Lu, "Risk Evaluation of Dynamic Alliance Based on Fuzzy Analytic Network Process and Fuzzy TOPSIS,"

References

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[5] T. K. Das and B. S. Teng, “A Risk Perception Model of Alliance Structuring,” Journal of International Management, Vol. 7, No. 1, 2001, pp. 1-29. doi:10.1016/S1075-4253(00)00037-5

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[10] H. Delerue and E. Simon, “National Cultural Values and the Perceived Relational Risks in Biotechnology Alliance Relationships,” International Business Review, Vol. 18, No. 1, 2009, pp. 14-25. doi:10.1016/j.ibusrev.2008.11.003

[11] M. Huang, F. Q. Lu, W. K. Ching and T. K. Siu, “A Distributed Decision Making Model for Risk Management of Virtual Enterprise,” Expert Systems with Applications, Vol. 38, No. 10, 2011, pp. 13208-13215. doi:10.1016/j.eswa.2011.04.135

[12] P. Y. Lee, H. H. Chen and Y. H. Shyr, “Driving Dynamic Knowledge Articulation and Dynamic Capabilities Development of Service Alliance Firms,” The Service Industries Journal, Vol. 31, No. 13, 2011, pp. 2223-2242. doi:10.1080/02642069.2010.504820

[13] X. G. Zhou and Y. T. Song, “The Application of Fuzzy Analytic Network Process in Risk Evaluation of Dynamic Alliance,” Proceedings of IEEE International Conference on Supernetworks and System Management, Shanghai, 29-30 May 2011, pp. 157-162

[14] A. Pires, N. B. Chang and G. Martinbo, “An AHP-Based Fuzzy Interval TOPSIS Assessment for Sustainable Expansion of the Solid Waste Management System in Setúbal Peninsula, Portugal,” Resources, Conservation and Recycling, Vol. 56, No. 1, 2011, pp. 7-21. doi:10.1016/j.resconrec.2011.08.004

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[16] Y. P. Ou Yang, H. M. Shieh and G. H. Tzeng, “A VIKOR Technique Based on DEMATEL and ANP for Information Security Risk Control Assessment,” Information Science, 2011, in Press. doi:10.1016/j.ins.2011.09.012

[17] N. S. Arunraj and J. Maiti, “Risk-Based Maintenance Policy Selection Using AHP and Goal Programming,” Safety Science, Vol. 48, No. 2, 2010, pp. 238-247. doi:10.1016/j.resconrec.2011.08.004

[18] P. J. M. Van Laarhoven and W. Pedrycz, “A fuzzy Extension of Saaty’s Priority Theory,” Fuzzy Sets and Systems, Vol. 11, No. 1-3, 1983, pp. 229-241.

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[21] R. Xu, “Fuzzy Least-Squares Priority Method in the Analytic Hierarchy Process,” Fuzzy Sets and Systems, Vol. 112, No. 3, 2000, pp. 359-404. doi:10.1016/S0165-0114(97)00376-X

[22] R. Csutora and J. J. Buckley, “Fuzzy Hierarchical Analysis: The Lamda-Max Method,” Fuzzy Sets and Systems, Vol. 120, No. 2, 2001, pp. 181-195. doi:10.1016/S0165-0114(99)00155-4

[23] L. Mikhailov, “Deriving Priorities from fuzzy Pairwise Comparison Judgements,” Fuzzy Sets and Systems, Vol. 134, No. 3, 2003, pp. 365-385. doi:10.1016/S0165-0114(02)00383-4

[24] B. Srdjevic. “Combining Different Prioritization Methods in the Analytic Hierarchy Process Synthesis,” Computers & Operations Research, Vol. 32, No. 7, 2005, pp. 18971919. doi:10.1016/j.cor.2003.12.005

[25] Y. M. Wang, T. M. S. Elhag and Z. S. Hua, “A modified Fuzzy Logarithmic Least Squares Method for Fuzzy Analytic Hierarchy Process,” Fuzzy Sets and Systems, Vol. 157, No. 23, 2006, pp. 3055-3071. doi:10.1016/j.fss.2006.08.010

[26] J. R. Yu and S. J. Cheng, “An Integrated Approach for Deriving Priorities in Analytic Network Process,” European Journal of Operational Research, Vol. 180, No. 3, 2007, pp. 1427-1432. doi:10.1016/j.ejor.2006.06.005

[27] L. A. Huo, J. B. Lan and Z. X. Wang, “New Parametric Prioritization Methods for an Analytical Hierarchy Process Based on a Pairwise Comparison Matrix,” Mathematical and Computer Modelling, Vol. 54, No. 11-12, 2011, pp. 2736-2749. doi:10.1016/j.mcm.2011.06.062

[28] C. L. Hwang and K. Yoon, “Multiple Attributes Decision Making Methods and Applications,” Springer, Berlin, 1981. doi:10.1007/978-3-642-48318-9

[29] S. J. Chen, C. L. Hwang and F. P. Hwang, “Fuzzy Multiple Attribute Decision Making,” Lecture Notes in Economics and Mathematical System, Vol. 375, 1992, pp. 1531.

[30] C. T. Chen, “Extensions of the TOPSIS for Group Decision-Making under fuzzy Environment,” Fuzzy Sets and Systems, Vol. 114, No. 1, 2000, pp. 1-9. doi:10.1016/S0165-0114(97)00377-1

[31] I. Mahdavi, N. Mahdavi-Amiri, A. Heidarzade and R. Nourifar, “Designing a Model of Fuzzy TOPSIS in Multiple Criteria Decision Making,” Applied Mathematics and Computation, Vol. 206, No. 2, 2008, pp. 607-617. doi:10.1016/j.amc.2008.05.047

[1] T. P. Munyon, A. A. Perryman, J. P. Morgante and G. R. Ferris, “Firm Relationships—The Dynamics of Effective Organization Alliances,” Organizational Dynamics, Vol. 40, No. 2, 2011, pp. 96-103. doi:10.1016/j.orgdyn.2011.01.003

[2] S. R. Holmberg and L. J. Cummings, “Building Successful Strategic Alliances-Strategic Process and Analytical Tool for Selecting Partner Industries and Firms,” Long Range Planning, Vol. 42, No. 2, 2009, pp. 164-193. doi:10.1016/j.lrp.2009.01.004

[3] Y. Li and X. W. Liao, “Decision Support for Risk Analysis on Dynamic Alliance,” Decision Support Systems, Vol. 42, No. 4, 2007, pp. 2043-2059. doi:10.1016/j.dss.2004.11.008

[4] R. Venkatesh, V. Mahajan and E. Muller, “Dynamic CoMarketing Alliances—When and Why Do They Succeed or Fail?” International Journal of Research in Marketing, Vol. 17, No. 1, 2000, pp. 3-31. doi:10.1016/S0167-8116(00)00004-5

[5] T. K. Das and B. S. Teng, “A Risk Perception Model of Alliance Structuring,” Journal of International Management, Vol. 7, No. 1, 2001, pp. 1-29. doi:10.1016/S1075-4253(00)00037-5

[6] S. Rosenkranz and P. W. Schmitz, “Optimal Allocation of Ownership Rights in Dynamic R&D Alliances,” Games and Economic Behavior, Vol. 43, No. 1, 2003, pp. 153-173. doi:10.1016/S0899-8256(02)00553-5

[7] W. H. Ip, M. Huang, K. L. Yung and D. W. Wang, “Genetic Algorithm Solution for a Risk-Based Partner Selection Problem in a Virtual Enterprise,” Computers & Operations Research, Vol. 30, No. 2, 2003, pp. 213-231. doi:10.1016/S0305-0548(01)00092-2

[8] T. K. Das and R. Kumar, “Learning Dynamics in the Alliance Development Process,” Management Decision, Vol. 45, No. 4, 2007, pp. 684-707. doi:10.1108/00251740710745980

[9] M. Huang, W. H. Ip, H. M. Yang, X. W. Wang and H. C. W. Lau, “A Fuzzy Synthetic Evaluation Embedded Tabu Search for Risk Programming of Virtual Enterprises,” International Journal of Production Economics, Vol. 116, No. 1, 2008, pp. 104-114. doi:10.1016/j.ijpe.2008.06.008

[10] H. Delerue and E. Simon, “National Cultural Values and the Perceived Relational Risks in Biotechnology Alliance Relationships,” International Business Review, Vol. 18, No. 1, 2009, pp. 14-25. doi:10.1016/j.ibusrev.2008.11.003

[11] M. Huang, F. Q. Lu, W. K. Ching and T. K. Siu, “A Distributed Decision Making Model for Risk Management of Virtual Enterprise,” Expert Systems with Applications, Vol. 38, No. 10, 2011, pp. 13208-13215. doi:10.1016/j.eswa.2011.04.135

[12] P. Y. Lee, H. H. Chen and Y. H. Shyr, “Driving Dynamic Knowledge Articulation and Dynamic Capabilities Development of Service Alliance Firms,” The Service Industries Journal, Vol. 31, No. 13, 2011, pp. 2223-2242. doi:10.1080/02642069.2010.504820

[13] X. G. Zhou and Y. T. Song, “The Application of Fuzzy Analytic Network Process in Risk Evaluation of Dynamic Alliance,” Proceedings of IEEE International Conference on Supernetworks and System Management, Shanghai, 29-30 May 2011, pp. 157-162

[14] A. Pires, N. B. Chang and G. Martinbo, “An AHP-Based Fuzzy Interval TOPSIS Assessment for Sustainable Expansion of the Solid Waste Management System in Setúbal Peninsula, Portugal,” Resources, Conservation and Recycling, Vol. 56, No. 1, 2011, pp. 7-21. doi:10.1016/j.resconrec.2011.08.004

[15] T. L. Saaty, “Decision Making with Dependence and Feedback: The Analytic Network Process,” RWS Publications, Pittsburgh, 1996.

[16] Y. P. Ou Yang, H. M. Shieh and G. H. Tzeng, “A VIKOR Technique Based on DEMATEL and ANP for Information Security Risk Control Assessment,” Information Science, 2011, in Press. doi:10.1016/j.ins.2011.09.012

[17] N. S. Arunraj and J. Maiti, “Risk-Based Maintenance Policy Selection Using AHP and Goal Programming,” Safety Science, Vol. 48, No. 2, 2010, pp. 238-247. doi:10.1016/j.resconrec.2011.08.004

[18] P. J. M. Van Laarhoven and W. Pedrycz, “A fuzzy Extension of Saaty’s Priority Theory,” Fuzzy Sets and Systems, Vol. 11, No. 1-3, 1983, pp. 229-241.

[19] J. J. Buckley, “Fuzzy Hierarchical Analysis,” Fuzzy Sets and Systems, Vol. 17, No. 3, 1985, pp. 233-247. doi:10.1016/0165-0114(85)90090-9

[20] D. Y. Chang, “Applications of the Extent Analysis Method on Fuzzy AHP,” European Journal of Operational Research, Vol. 95, No. 3, 1996, pp. 649-655. doi:10.1016/0377-2217(95)00300-2

[21] R. Xu, “Fuzzy Least-Squares Priority Method in the Analytic Hierarchy Process,” Fuzzy Sets and Systems, Vol. 112, No. 3, 2000, pp. 359-404. doi:10.1016/S0165-0114(97)00376-X

[22] R. Csutora and J. J. Buckley, “Fuzzy Hierarchical Analysis: The Lamda-Max Method,” Fuzzy Sets and Systems, Vol. 120, No. 2, 2001, pp. 181-195. doi:10.1016/S0165-0114(99)00155-4

[23] L. Mikhailov, “Deriving Priorities from fuzzy Pairwise Comparison Judgements,” Fuzzy Sets and Systems, Vol. 134, No. 3, 2003, pp. 365-385. doi:10.1016/S0165-0114(02)00383-4

[24] B. Srdjevic. “Combining Different Prioritization Methods in the Analytic Hierarchy Process Synthesis,” Computers & Operations Research, Vol. 32, No. 7, 2005, pp. 18971919. doi:10.1016/j.cor.2003.12.005

[25] Y. M. Wang, T. M. S. Elhag and Z. S. Hua, “A modified Fuzzy Logarithmic Least Squares Method for Fuzzy Analytic Hierarchy Process,” Fuzzy Sets and Systems, Vol. 157, No. 23, 2006, pp. 3055-3071. doi:10.1016/j.fss.2006.08.010

[26] J. R. Yu and S. J. Cheng, “An Integrated Approach for Deriving Priorities in Analytic Network Process,” European Journal of Operational Research, Vol. 180, No. 3, 2007, pp. 1427-1432. doi:10.1016/j.ejor.2006.06.005

[27] L. A. Huo, J. B. Lan and Z. X. Wang, “New Parametric Prioritization Methods for an Analytical Hierarchy Process Based on a Pairwise Comparison Matrix,” Mathematical and Computer Modelling, Vol. 54, No. 11-12, 2011, pp. 2736-2749. doi:10.1016/j.mcm.2011.06.062

[28] C. L. Hwang and K. Yoon, “Multiple Attributes Decision Making Methods and Applications,” Springer, Berlin, 1981. doi:10.1007/978-3-642-48318-9

[29] S. J. Chen, C. L. Hwang and F. P. Hwang, “Fuzzy Multiple Attribute Decision Making,” Lecture Notes in Economics and Mathematical System, Vol. 375, 1992, pp. 1531.

[30] C. T. Chen, “Extensions of the TOPSIS for Group Decision-Making under fuzzy Environment,” Fuzzy Sets and Systems, Vol. 114, No. 1, 2000, pp. 1-9. doi:10.1016/S0165-0114(97)00377-1

[31] I. Mahdavi, N. Mahdavi-Amiri, A. Heidarzade and R. Nourifar, “Designing a Model of Fuzzy TOPSIS in Multiple Criteria Decision Making,” Applied Mathematics and Computation, Vol. 206, No. 2, 2008, pp. 607-617. doi:10.1016/j.amc.2008.05.047