Use of Determination of the Importance of Criteria in Business-Friendly Certification of Cities as Sustainable Local Economic Development Planning Tool

Abstract

One of the essential activities for sustainable local economic development is continuous improvement of business environment which can be carried out through the business-friendly certification as objective benchmarking process, which is influenced by many factors - criteria that could be analyzed using multi-criteria decision-making methods. Determining criteria weights is the most important task regarding these methods for which a number of methodologies based on different approaches were developed. These methodologies could be generally divided into two groups: subjective and objective. Shortly, these methodologies quantify given preferences using knowledge of experts if they are subjective or using calculations from available data if they are objective. Methodologies from these two groups give different results in a wide range of values. Therefore, it is useful to create composite indicators using aggregation of both approaches in order to reduce the influence of their bad individual characteristics and, therefore, achieve a balanced symmetrical approach. The purpose of this paper is constructing one efficient model that solves a problem of the planning of sustainable local economic development in the Republic of Serbia. Our approach uses the aggregation of the entropy method, as one objective approach, and the analytical hierarchy process, as a subjective approach, in executing business-friendly certification process. The implementation of the proposed approach has been demonstrated as a part of a business-to-government (B2G) platform called “Multi-Criteria Support System for Analysis of the Local Economic Environment” in the City of Niš.