IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v16y2023i2p88-d1054577.html
   My bibliography  Save this article

A New Multi-Dimensional Framework for Start-Ups Lifespan Assessment Using Bayesian Networks

Author

Listed:
  • Mohammadreza Valaei

    (Industrial Engineering Department, Bu-Ali Sina University, Hamedan 6516738695, Iran)

  • Vahid Khodakarami

    (Industrial Engineering Department, Bu-Ali Sina University, Hamedan 6516738695, Iran)

Abstract

As historical data are typically unavailable for a start-up, risk assessment is always complex and challenging. Traditional methods are incapable of capturing all facets of this complexity; therefore, more sophisticated tools are necessary. Using an expert-elicited Bayesian networks (BNs) methodology, this paper aims to provide a method for combining diverse sources of information, such as historical data, expert knowledge, and the unique characteristics of each start-up, to estimate the default rate at various stages of the life cycle. The proposed method not only reduces the cognitive error of expert opinion for a new start-up but also considers the learning feature of BNs and the effect of lifespan when updating default estimations. In addition, the model considers the impact of investors’ risk appetite. Furthermore, the model can rank the most effective risk factors at various stages. The receiver operating characteristic (ROC) curve was utilized to assess the model’s explanatory power. Moreover, three distinct case studies were used to demonstrate the model’s capabilities.

Suggested Citation

  • Mohammadreza Valaei & Vahid Khodakarami, 2023. "A New Multi-Dimensional Framework for Start-Ups Lifespan Assessment Using Bayesian Networks," JRFM, MDPI, vol. 16(2), pages 1-19, February.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:2:p:88-:d:1054577
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/16/2/88/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/16/2/88/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nadkarni, Sucheta & Shenoy, Prakash P., 2001. "A Bayesian network approach to making inferences in causal maps," European Journal of Operational Research, Elsevier, vol. 128(3), pages 479-498, February.
    2. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas, 2021. "Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession," Small Business Economics, Springer, vol. 56(1), pages 83-103, January.
    3. Edward I. Altman & Marco Balzano & Alessandro Giannozzi & Stjepan Srhoj, 2023. "Revisiting SME default predictors: The Omega Score," Journal of Small Business Management, Taylor & Francis Journals, vol. 61(6), pages 2383-2417, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Canzian, Giulia & Meroni, Elena Claudia & Santangelo, Giulia, 2023. "Evaluation of a Flemish Active Labour Market Policy in the framework of the European Social Fund. Results and challenges," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    2. De Iuliis, Melissa & Kammouh, Omar & Cimellaro, Gian Paolo & Tesfamariam, Solomon, 2021. "Quantifying restoration time of power and telecommunication lifelines after earthquakes using Bayesian belief network model," Reliability Engineering and System Safety, Elsevier, vol. 208(C).
    3. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas & Janette Walde, 2022. "Small matching grants for women entrepreneurs: lessons from the past recession," Small Business Economics, Springer, vol. 59(1), pages 117-142, June.
    4. Srhoj, Stjepan & Walde, Janette, 2020. "Getting ready for EU Single Market: The effect of export-oriented grant schemes on firm performance," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 279-293.
    5. Ülengin, Füsun & Önsel, Sule & Ilker Topçu, Y. & Aktas, Emel & Kabak, Özgür, 2007. "An integrated transportation decision support system for transportation policy decisions: The case of Turkey," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(1), pages 80-97, January.
    6. Stjepan Srhoj & Michael Lapinski & Janette Walde, 2019. "Size matters? Impact evaluation of business development grants on SME performance," Working Papers 2019-14, Faculty of Economics and Statistics, Universität Innsbruck.
    7. Ondřej Dvouletý & Stjepan Srhoj & Smaranda Pantea, 2021. "Public SME grants and firm performance in European Union: A systematic review of empirical evidence," Small Business Economics, Springer, vol. 57(1), pages 243-263, June.
    8. A Chan & K R McNaught, 2008. "Using Bayesian networks to improve fault diagnosis during manufacturing tests of mobile telephone infrastructure," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(4), pages 423-430, April.
    9. Srhoj, Stjepan & Kovač, Dejan & Shapiro, Jacob N. & Filer, Randall K., 2023. "The impact of delay: Evidence from formal out-of-court restructuring," Journal of Corporate Finance, Elsevier, vol. 78(C).
    10. Pasovic Edin & Efendic Adnan S., 2018. "Informal Economy in Bosnia and Herzegovina – An Empirical Investigation," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 112-125, December.
    11. Ryota Nakatani, 2023. "Does debt maturity influence productivity?," Economics Bulletin, AccessEcon, vol. 43(1), pages 116-136.
    12. Nurul Ashykin Abd Aziz & Mohd Hizam-Hanafiah & Hasif Rafidee Hasbollah & Zuraimi Abdul Aziz & Nik Syuhailah Nik Hussin, 2022. "Understanding the Survival Ability of Franchise Industries during the COVID-19 Crisis in Malaysia," Sustainability, MDPI, vol. 14(6), pages 1-17, March.
    13. Shai Harel & Eliran Solodoha & Stav Rosenzweig, 2022. "Can Entrepreneurs Who Experienced Business Closure Bring Their New Start-Up to a Successful M&A?," JRFM, MDPI, vol. 15(9), pages 1-17, August.
    14. Jyrki Wallenius & James S. Dyer & Peter C. Fishburn & Ralph E. Steuer & Stanley Zionts & Kalyanmoy Deb, 2008. "Multiple Criteria Decision Making, Multiattribute Utility Theory: Recent Accomplishments and What Lies Ahead," Management Science, INFORMS, vol. 54(7), pages 1336-1349, July.
    15. William Stevenson & Robert Radin, 2015. "The minds of the board of directors: the effects of formal position and informal networks among board members on influence and decision making," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(2), pages 421-460, May.
    16. Kabir, Golam & Tesfamariam, Solomon & Francisque, Alex & Sadiq, Rehan, 2015. "Evaluating risk of water mains failure using a Bayesian belief network model," European Journal of Operational Research, Elsevier, vol. 240(1), pages 220-234.
    17. Behnam Azhdari & Jean Bonnet & Sébastien Bourdin, 2022. "Towards a Causal Model and Causal Inference of Regional Entrepreneurship Development Index, its antecedents and outcomes in European regions," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2022-06, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    18. Amrin, Andas & Zarikas, Vasileios & Spitas, Christos, 2018. "Reliability analysis and functional design using Bayesian networks generated automatically by an “Idea Algebra†framework," Reliability Engineering and System Safety, Elsevier, vol. 180(C), pages 211-225.
    19. Ülengin, Füsun & Kabak, Özgür & Önsel, Sule & Ülengin, Burç & Aktas, Emel, 2010. "A problem-structuring model for analyzing transportation-environment relationships," European Journal of Operational Research, Elsevier, vol. 200(3), pages 844-859, February.
    20. Nebojša Stojčić, 2021. "Collaborative innovation in emerging innovation systems: Evidence from Central and Eastern Europe," The Journal of Technology Transfer, Springer, vol. 46(2), pages 531-562, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:16:y:2023:i:2:p:88-:d:1054577. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.