Measurement and Sorting of MSMEs Business Performance Rating Using Analytical Hierarchy Process
Keywords:
MSME, Venture Capital, Business Performance, Analytical Hierarchy Process, Sorting
Abstract
This research was conducted in an enterprise that provides venture capital assistance to its 876 Micro, Small, and Medium Enterprises (MSME) partners to measure and sort the performance of their business. The enterprise wished for a business performance calculation system that is more reliable and utilized more than one criterion. In addition, the enterprise also desired to give rewards to MSMEs with the most excel accomplishment, so they need to know which MSMEs are the most developed among others. This study uses focus group discussions and existing data to obtain the appropriate performance measurement criteria. The determination of the weight of the importance of each criterion was carried out using the Analytical Hierarchy Process (AHP) method using pairwise comparison techniques and its consistency is measured using the transitive property and consistency ratio. The proposed method is emphasized on ease of use and delivery to stakeholders but still capable of acquiring the performance calculation. The calculation includes the increase or decrease rate of the business performance for each MSME, and after sorting the rating, the most accomplished MSME also can be found. The application of this method also can help the stakeholder to reach consensus swiftly.
References
[1] I. Y. Niode, "SEKTOR UMKM DI INDONESIA: Profil , Masalah, Dan Strategi Pemberdayaan," Jurnal Kajian Ekonomi dan Bisnis OIKOS-NOMOS, vol. 2, no. 1, Januari 2009.
[2] E. Purwanti, "Pengaruh karakteristik wirausaha, modal usaha, strategi pemasaran terhadap perkembangan UMKM di Desa Dayaan dan Kalilondo Salatiga," Among Makarti, vol. 5, no. 1, 013.
[3] Y. R. Suci, "PERKEMBANGAN UMKM (USAHA MIKRO KECIL DAN MENENGAH) DI INDONESIA," Jurnal Ilmiah Cano Ekonomos, vol. 6, no. 1, pp. 51-58, 2017.
[4] J. Y. Abor, Entrepreneurial Finance for MSMEs: A Managerial Approach for Developing Markets, Springer, 2016.
[5] M. M. Hennink, Focus Group Discussions, Oxford University Press, 2013.
[6] T. L. Saaty and K. Peniwati, Group Decision Making: Drawing Out and Reconciling Differences, RWS Publications, 2013.
[7] A. Khaira and R. K. Dwivedi, "A state of the art review of analytical hierarchy process," Materials Today: Proceedings, vol. 5, no. 2, pp. 4029-4035, 2018.
[8] P. Arroyo, I. Tommelein and G. Ballard, "Comparing AHP and CBA as Decision Methods to Resolve the Choosing Problem in Detailed Design," Journal of Construction Engineering and Management, vol. 141, no. 1, January 2015.
[9] M. Velasquez and P. T. Hester, "An Analysis of Multi-Criteria Decision Making Methods," International Journal of Operations Research, vol. 10, no. 2, pp. 56-66, 2013.
[10] F. Liu, Y. Peng, W. Zhang and W. Pedrycz, "On Consistency in AHP and Fuzzy AHP," Journal of Systems Science and Information, vol. 5, no. 2, p. 128–147, 2017.
[11] S. Siraj, L. Mikhailov and J. A. Keane, "Contribution of individual judgments toward inconsistency in pairwise comparisons," European Journal of Operational Research, vol. 242, no. 2, pp. 557-567, 2015.
[12] G. Kou, D. Ergu, C. Lin and Y. Chen, "Pairwise comparison matrix in multiple criteria decision making," Technological and Economic Development of Economy, vol. 22, no. 5, p. 738–765, 2016.
[13] A. Z. Grzybowski and T. Starczewski, "Remarks about Inconsistency Analysis in the Pairwise Comparison Technique," in IEEE 14th International Scientific Conference on Informatics, 2017.
[14] V. Bureš, J. Cabal, P. Cech, K. Mls and D. Ponce, "The Influence of Criteria Selection Method on Consistency of Pairwise Comparison," Mathematics, vol. 8, p. 2200, 2020.
[15] F. Catalá-López, B. Hutton and D. Moher, "The transitive property across randomized controlled trials: if B is better than A, and C is better than B, will C be better than A?," Revista Española de Cardiología (English Edition), vol. 67, no. 8, pp. 597-602, 2014.
[16] T. L. Saaty, "Decision-making with the AHP: Why is the principal eigenvector necessary," European Journal of Operational Research, vol. 145, no. 1, pp. 85-91, 2003.
[17] N. Vafaei, R. A. Ribeiro and L. M. Camarinh, "Normalization Techniques for Multi-Criteria Decision Making: Analytical Hierarchy Process Case Study," in Doctoral Conference on Computing, Electrical and Industrial Systems (DoCEIS 2016): Technological Innovation for Cyber-Physical Systems, 2016.
[18] A. Celen, "Comparative Analysis of Normalization Procedures in TOPSIS Method: With an Application to Turkish Deposit Banking Market," INFORMATICA, vol. 25, no. 2, pp. 185-208, 2014.
[19] P. E. PRASETYO, "The Role of Government Expenditure and Investment for MSME Growth: Empirical Study in Indonesia," The Journal of Asian Finance, Economics and Business, vol. 7, no. 10, pp. 471-480, 2020.
[20] S. Wulandari, A. C. Utama and M. Arfidh, "Selecting Benchmarking Partners Using Analytical Hierarchy Process Approach," INTERNATIONAL JOURNAL OF INNOVATION IN ENTERPRISE SYSTEM, vol. 4, no. 2, 2020.
[21] R. d. F. Russo and R. Camanho, "Criteria in AHP: A Systematic Review of Literature," Procedia Computer Science, vol. 55, pp. 1123-1132, 2015.
[22] V. Balali, B. Zahraie and A. Roozbahani, "A Comparison of AHP and PROMETHEE Family Decision Making Methods for Selection of Building Structural System," American Journal of Civil Engineering and Architecture, vol. 2, no. 5, pp. 149-159, 2014.
[23] A. Jozaghi , B. Alizadeh, M. Hatami, I. Flood, M. Khorrami, N. Khodaei and E. G. Tousi, "A Comparative Study of the AHP and TOPSIS Techniques for Dam Site Selection Using GIS: A Case Study of Sistan and Baluchestan Province, Iran," Geosciences, vol. 8, no. 12, p. 494, 2018.
[24] M. M. D. Widianta, T. Rizaldi, D. P. S. Setyohadi and H. Y. Riskiawan, "Comparison of Multi-Criteria Decision Support Methods (AHP, TOPSIS, SAW & PROMENTHEE) for Employee Placement," Journal of Physics: Conference Series, vol. 953, 2018.
[25] R. P. Soesanto and A. F. Rizana, "Decision Support System Design for Wedding Organizer Tradeshow Selection using AHP and TOPSIS," INTERNATIONAL JOURNAL OF INNOVATION IN ENTERPRISE SYSTEM, vol. 5, no. 1, 2021.
[26] H.-M. Lyu, W.-H. Zhou, S.-L. Shen and A.-N. Zhou, "Inundation risk assessment of metro system using AHP and TFN-AHP in Shenzhen," Sustainable Cities and Society, vol. 56, 2020.
[27] D. Bogdanovic, D. Nikolic and I. Ilic, "Mining method selection by integrated AHP and PROMETHEE method," Anais da Academia Brasileira de Ciências, vol. 84, pp. 219-233, 2012.
[28] G. POLAT, "Subcontractor selection using the integration of the AHP and PROMETHEE methods," Journal of Civil Engineering and Management, vol. 22, no. 8, pp. 1042-1054, 2016.
[29] B. Sennaroglu and G. V. Celebi, "A military airport location selection by AHP integrated PROMETHEE and VIKOR methods," Transportation Research Part D: Transport and Environment, vol. 59, pp. 160-173, 2018.
[2] E. Purwanti, "Pengaruh karakteristik wirausaha, modal usaha, strategi pemasaran terhadap perkembangan UMKM di Desa Dayaan dan Kalilondo Salatiga," Among Makarti, vol. 5, no. 1, 013.
[3] Y. R. Suci, "PERKEMBANGAN UMKM (USAHA MIKRO KECIL DAN MENENGAH) DI INDONESIA," Jurnal Ilmiah Cano Ekonomos, vol. 6, no. 1, pp. 51-58, 2017.
[4] J. Y. Abor, Entrepreneurial Finance for MSMEs: A Managerial Approach for Developing Markets, Springer, 2016.
[5] M. M. Hennink, Focus Group Discussions, Oxford University Press, 2013.
[6] T. L. Saaty and K. Peniwati, Group Decision Making: Drawing Out and Reconciling Differences, RWS Publications, 2013.
[7] A. Khaira and R. K. Dwivedi, "A state of the art review of analytical hierarchy process," Materials Today: Proceedings, vol. 5, no. 2, pp. 4029-4035, 2018.
[8] P. Arroyo, I. Tommelein and G. Ballard, "Comparing AHP and CBA as Decision Methods to Resolve the Choosing Problem in Detailed Design," Journal of Construction Engineering and Management, vol. 141, no. 1, January 2015.
[9] M. Velasquez and P. T. Hester, "An Analysis of Multi-Criteria Decision Making Methods," International Journal of Operations Research, vol. 10, no. 2, pp. 56-66, 2013.
[10] F. Liu, Y. Peng, W. Zhang and W. Pedrycz, "On Consistency in AHP and Fuzzy AHP," Journal of Systems Science and Information, vol. 5, no. 2, p. 128–147, 2017.
[11] S. Siraj, L. Mikhailov and J. A. Keane, "Contribution of individual judgments toward inconsistency in pairwise comparisons," European Journal of Operational Research, vol. 242, no. 2, pp. 557-567, 2015.
[12] G. Kou, D. Ergu, C. Lin and Y. Chen, "Pairwise comparison matrix in multiple criteria decision making," Technological and Economic Development of Economy, vol. 22, no. 5, p. 738–765, 2016.
[13] A. Z. Grzybowski and T. Starczewski, "Remarks about Inconsistency Analysis in the Pairwise Comparison Technique," in IEEE 14th International Scientific Conference on Informatics, 2017.
[14] V. Bureš, J. Cabal, P. Cech, K. Mls and D. Ponce, "The Influence of Criteria Selection Method on Consistency of Pairwise Comparison," Mathematics, vol. 8, p. 2200, 2020.
[15] F. Catalá-López, B. Hutton and D. Moher, "The transitive property across randomized controlled trials: if B is better than A, and C is better than B, will C be better than A?," Revista Española de Cardiología (English Edition), vol. 67, no. 8, pp. 597-602, 2014.
[16] T. L. Saaty, "Decision-making with the AHP: Why is the principal eigenvector necessary," European Journal of Operational Research, vol. 145, no. 1, pp. 85-91, 2003.
[17] N. Vafaei, R. A. Ribeiro and L. M. Camarinh, "Normalization Techniques for Multi-Criteria Decision Making: Analytical Hierarchy Process Case Study," in Doctoral Conference on Computing, Electrical and Industrial Systems (DoCEIS 2016): Technological Innovation for Cyber-Physical Systems, 2016.
[18] A. Celen, "Comparative Analysis of Normalization Procedures in TOPSIS Method: With an Application to Turkish Deposit Banking Market," INFORMATICA, vol. 25, no. 2, pp. 185-208, 2014.
[19] P. E. PRASETYO, "The Role of Government Expenditure and Investment for MSME Growth: Empirical Study in Indonesia," The Journal of Asian Finance, Economics and Business, vol. 7, no. 10, pp. 471-480, 2020.
[20] S. Wulandari, A. C. Utama and M. Arfidh, "Selecting Benchmarking Partners Using Analytical Hierarchy Process Approach," INTERNATIONAL JOURNAL OF INNOVATION IN ENTERPRISE SYSTEM, vol. 4, no. 2, 2020.
[21] R. d. F. Russo and R. Camanho, "Criteria in AHP: A Systematic Review of Literature," Procedia Computer Science, vol. 55, pp. 1123-1132, 2015.
[22] V. Balali, B. Zahraie and A. Roozbahani, "A Comparison of AHP and PROMETHEE Family Decision Making Methods for Selection of Building Structural System," American Journal of Civil Engineering and Architecture, vol. 2, no. 5, pp. 149-159, 2014.
[23] A. Jozaghi , B. Alizadeh, M. Hatami, I. Flood, M. Khorrami, N. Khodaei and E. G. Tousi, "A Comparative Study of the AHP and TOPSIS Techniques for Dam Site Selection Using GIS: A Case Study of Sistan and Baluchestan Province, Iran," Geosciences, vol. 8, no. 12, p. 494, 2018.
[24] M. M. D. Widianta, T. Rizaldi, D. P. S. Setyohadi and H. Y. Riskiawan, "Comparison of Multi-Criteria Decision Support Methods (AHP, TOPSIS, SAW & PROMENTHEE) for Employee Placement," Journal of Physics: Conference Series, vol. 953, 2018.
[25] R. P. Soesanto and A. F. Rizana, "Decision Support System Design for Wedding Organizer Tradeshow Selection using AHP and TOPSIS," INTERNATIONAL JOURNAL OF INNOVATION IN ENTERPRISE SYSTEM, vol. 5, no. 1, 2021.
[26] H.-M. Lyu, W.-H. Zhou, S.-L. Shen and A.-N. Zhou, "Inundation risk assessment of metro system using AHP and TFN-AHP in Shenzhen," Sustainable Cities and Society, vol. 56, 2020.
[27] D. Bogdanovic, D. Nikolic and I. Ilic, "Mining method selection by integrated AHP and PROMETHEE method," Anais da Academia Brasileira de Ciências, vol. 84, pp. 219-233, 2012.
[28] G. POLAT, "Subcontractor selection using the integration of the AHP and PROMETHEE methods," Journal of Civil Engineering and Management, vol. 22, no. 8, pp. 1042-1054, 2016.
[29] B. Sennaroglu and G. V. Celebi, "A military airport location selection by AHP integrated PROMETHEE and VIKOR methods," Transportation Research Part D: Transport and Environment, vol. 59, pp. 160-173, 2018.
Published
2022-07-31
How to Cite
Arini, I., & Yastica, T. (2022, July 31). Measurement and Sorting of MSMEs Business Performance Rating Using Analytical Hierarchy Process. International Journal of Innovation in Enterprise System, 6(02), 119-131. https://doi.org/https://doi.org/10.25124/ijies.v6i02.181
Section
Management and Systems Engineering
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
