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The OWA distance operator and its application in business failure

Valeria Scherger (Economic Department, Universidad Nacional del Sur, Argentina)
Antonio Terceño (Faculty of Business and Economics, Management Department, Universitat Rovira i Virgili, Reus, Spain)
Hernán Vigier (Economic Department, Universidad Nacional del Sur, Argentina and CEDETS, Bahía Blanca, Argentina and UPSO, Bahía Blanca, Argentina)

Kybernetes

ISSN: 0368-492X

Article publication date: 9 January 2017

231

Abstract

Purpose

The purpose of this paper is to develop a goodness index based on Hamming distance and ordered weighted averaging distance (OWAD), which is useful to make decisions. These alternative measures enrich the results of diagnostic fuzzy models and facilitate the experts’ task in decision-making. An application to a set of firms to verify the results is also presented.

Design/methodology/approach

The paper follows the basis of OWA operators to design a methodology to reduce the map of causes of business failure into monitoring key areas.

Findings

The present paper introduces two alternative measures to test the proposal of grouping. In the empirical application, the superiority of the minimum T-norm over other decision rules is verified. The ordered weighted averaging distance (OWAD) goodness index predicts a better adjustment over the index built using OWA and Hamming distance measures.

Practical implications

A useful mechanism to reduce the map of causes or diseases detected in key areas is added through this analysis. At the same time, these key areas can be disaggregated once some alert indicator is identified; this allows knowing the causes that require special attention. This application of OWA can encourage the development of suitable computer systems for monitoring the firm’s problems, alerting regarding failures and easing decision-making.

Originality/value

A comparison of grouping causes into key areas through a goodness index based on Hamming distance and OWAD is proposed. These contributions enrich the Vigier and Terceño (2008) model and could be applied to any model of fuzzy diagnosis to test the results.

Keywords

Citation

Scherger, V., Terceño, A. and Vigier, H. (2017), "The OWA distance operator and its application in business failure", Kybernetes, Vol. 46 No. 1, pp. 114-130. https://doi.org/10.1108/K-05-2016-0107

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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