A new approach factor- entropy with application to business costs of SMEs in Shanghai

Document Type : Research Paper


Glorious Sun School of Business & Management, Donghua University, Shanghai, China


Business cost is acknowledged as one of the priorities in SMEs research. In this
study, the business cost of SMEs in Shanghai was primarily measured using Factor-
Entropy analysis method. The purpose of this study is to effectively resolve the issue
of simplification and assignment evaluation index system on business costs of SMEs
in Shanghai. However, this study uses factor analysis to interpret the data on
indicators, through a cross-sectional survey, considering the objective empowerment
with entropy method. It was shown that factor-entropy method to evaluation index
system has advantages. The samples selected involves 309 executives and managers
of 16 SMEs in shanghai that are in support of the development funds of Shanghai
SMEs in China in 2013. Finally, Factor-Entropy analysis method is a combination of
subjective and objective evaluation method, which are the indicators of the main
component indexes calculated entropy valves and sorting with scores. The results
show that the impact of the external environment (Policies and market-oriented
operation) in the Multi-target of Business-cost was significant and positive. The
value obtained in this study is to provide an applicable unique measurement method
to situations where the necessary information is insufficient for complex or fuzzy
systems and relations, and mainly identify and evaluate information of business
costs in small medium-sized businesses in Shanghai.


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