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An analytic hierarchy process based simulation model for entry mode decision regarding foreign direct investment

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  • Levary, Reuven R.
  • Wan, Ke

Abstract

A methodology is developed for ranking entry mode alternatives encountered by individual firms considering foreign direct investment (FDI). The methodology deals with the risks and uncertainties related to FDI. The analytic hierarchy process (AHP) is used to solve the multiple criteria decision-making problem using input from a firm's management. A simulation approach is incorporated into the AHP to handle the uncertainty considerations encountered in an FDI environment. The uncertainties include: (1) uncertainty regarding the future characteristics of the FDI decision making environment, (2) uncertainty associated with the decision maker's judgment regarding pairwise comparisons necessitated by the AHP.

Suggested Citation

  • Levary, Reuven R. & Wan, Ke, 1999. "An analytic hierarchy process based simulation model for entry mode decision regarding foreign direct investment," Omega, Elsevier, vol. 27(6), pages 661-677, December.
    • Handle: RePEc:eee:jomega:v:27:y:1999:i:6:p:661-677
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    5. Fatih Tüysüz, 2018. "Simulated Hesitant Fuzzy Linguistic Term Sets-Based Approach for Modeling Uncertainty in AHP Method," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 17(03), pages 801-817, May.
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    7. Aguaron, Juan & Moreno-Jimenez, Jose Maria, 2003. "The geometric consistency index: Approximated thresholds," European Journal of Operational Research, Elsevier, vol. 147(1), pages 137-145, May.
    8. Tien-Chin Wang & Chia-Nan Wang & Xuan Huynh Nguyen, 2016. "Evaluating the Influence of Criteria to Attract Foreign Direct Investment (FDI) to Develop Supporting Industries in Vietnam by Utilizing Fuzzy Preference Relations," Sustainability, MDPI, vol. 8(5), pages 1-14, May.
    9. Durbach, Ian & Lahdelma, Risto & Salminen, Pekka, 2014. "The analytic hierarchy process with stochastic judgements," European Journal of Operational Research, Elsevier, vol. 238(2), pages 552-559.
    10. Ian Durbach, 2019. "Scenario planning in the analytic hierarchy process," Futures & Foresight Science, John Wiley & Sons, vol. 1(2), June.
    11. Hocine, Amine & Kouaissah, Noureddine, 2020. "XOR analytic hierarchy process and its application in the renewable energy sector," Omega, Elsevier, vol. 97(C).
    12. Durbach, Ian N. & Stewart, Theodor J., 2012. "Modeling uncertainty in multi-criteria decision analysis," European Journal of Operational Research, Elsevier, vol. 223(1), pages 1-14.
    13. Vaidya, Omkarprasad S. & Kumar, Sushil, 2006. "Analytic hierarchy process: An overview of applications," European Journal of Operational Research, Elsevier, vol. 169(1), pages 1-29, February.

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