New approach for risks ranking of the initial innovation idea using data envelopment analysis

Abstract

Purpose – this paper presents the application of Data Envelopment Analysis (DEA) for risks ranking in a graphical form at the initial stages of the innovation process, by using the innovation potential as an output parameter of DEA. Research methodology – an example of the potential change of a given innovation under the influence of certain risk is presented. The data for the risk assessment and the reduction of the potential after the expression of the risks are given. On the bases of this data, a graph for the boundaries of the risk effectiveness is constructed, according to DEA models. Findings – DEA is applicable for the risk ranking, including for risks with equal effectiveness evaluations. Research limitations – the approach is applied to risks which are initially selected for ranking. The other types of risks are not considered, and they need separate research attention. Practical implications – the new approach may be used in the initial stages of product and process innovation. Originality/Value – the innovation potential is used as an output parameter in the DEA to graphically rank the risk of the initial innovation applications.