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The Development of Methodology for Innovative Project Effectiveness Parameter Estimation in Direction of Fuzzy Set Application

Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)

Abstract

The purpose of the paper is to develop methodology of sustainability and reliability estimation of innovative project effectiveness’ parameters with application of fuzzy sets, as well as the procedure of computation of reliability and sustainability of its fuzzy parameters. The method of fuzzy sets allows to estimate the fluctuation range of innovative project parameters depending on “swinging” its main input (exogenous) parameters, such as market prices of the product, investments expenditures, raw materials costs, etc. In the same time, it becomes possible to assess sustainability of the project effectiveness parameters to variations of its main input parameters, as well as their reliability. The use of fuzzy sets extends the capabilities of real options method’s application to analysis of the effectiveness of investments in innovative projects and also allows to take into account the factor of uncertainty much better, which is especially important in the case of innovations implementation. Fuzzy set assessment of sustainability of forecasted financial flows and financial parameters generated by innovative project is carried out in three directions: for assessment of an innovative project effectiveness in a whole using discounted cash flows method, for assessment of innovative project effectiveness using the NPV method from venture fund’s position, and for assessment of innovative project effectiveness using the NPV method from position of a venture fund with application of real options. The developed methodology and computing procedures are tested on a real innovative project in the pharmaceutical industry.

Keywords

Real options method Venture financing Fuzzy sets Innovative project Uncertainty 

Notes

Acknowledgment

This research was financially supported by the Russian Foundation for Basic Research (RFBR) (Grant NO. 15–06-06914).

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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  • Alexander Baranov
    • 1
  • Elena Muzyko
    • 2
  • Victor Pavlov
    • 3
  1. 1.Novosibirsk State UniversityNovosibirskRussia
  2. 2.Novosibirsk State Technical UniversityNovosibirskRussia
  3. 3.Peter the Great Saint Petersburg Polytechnic UniversitySaint PetersburgRussia

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