A method for determining SRI selection ratios that reflect investors' value judgments model of a multifactor information channel weighted using fuzzy entropy

Mamoru Uehara, Hiroshi Yamashita, Takahiro Ohno

Research output: Contribution to journalArticle

Abstract

In recent years investors have began to observe socially responsible investment (SRI) and selecting companies that are evaluated highly in this respect over those performing well in the area of corporate social responsibility (CSR). However, investors' needs or value judgments do not fully reflect present SRI screenings. In this study, the authors clarify the problems related to investment selection and decisions for present SRI screening selection ratios, and introduce a new model the resolves the problems related to determining investment selection ratios. Specifically, assuming a set with an undefined border (fuzzy set), we consider the fuzzy entropy expressing an unspecified amount of information. Then we introduce a model of a multifactor information channel weighted using fuzzy entropy. This model briefly expresses the decision-making process of the investment selection ratios, which reflects investors' value judgments in evaluation weights, thereby showing both sides of the human self-seeking selection action (randomness+ fuzziness: fuzzy entropy) and satisfaction (average characteristic value) regarding the quality of the CSR characterized in each investment (alternatives). Using questionnaires, we estimate the SRI selection ratio, and examine and compare the proposed model with actual selection ratios.

Original languageEnglish
Pages (from-to)125-135
Number of pages11
JournalJournal of Japan Industrial Management Association
Volume58
Issue number2
Publication statusPublished - 2007 Aug 31

Keywords

  • CSR
  • Entropy model
  • Fuzzy entropy
  • Risk management
  • SRI

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Applied Mathematics

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