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Unveiling the Nexus between Access to Electricity, Firm Size and SME’s Performance in Bangladesh: New Evidence Using PSM

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  • Mohammad Abir Shahid Chowdhury

    (School of Economics and Management, China University of Geosciences (Wuhan), Wuhan 430074, China)

  • Shuai Chuanmin

    (School of Economics and Management, China University of Geosciences (Wuhan), Wuhan 430074, China)

  • Marcela Sokolová

    (Department of Management, Faculty of Informatics and Management, University of Hradec Kralove, 500 03 Hradec Kralove, Czech Republic)

  • ABM Munibur Rahman

    (Business School, Wuchang University of Technology, Wuchang, Wuhan 430223, China)

  • Ahsan Akbar

    (Department of Management, Faculty of Informatics and Management, University of Hradec Kralove, 500 03 Hradec Kralove, Czech Republic
    International Business School, Guangzhou City University of Technology, Guangzhou 510080, China)

  • Zahid Ali

    (Department of Commerce and Management, University of Malakand, Malakand 23050, Pakistan)

  • Muhammad Usman

    (Department of Economics and Business Administration, Faisalabad Campus, University of Education, Lahore 38000, Pakistan)

Abstract

Uninterrupted availability of energy and power resources is essential for the productivity and smooth functioning of an enterprise. However, constrained by financial resources, smaller firms in developing economies face a plethora of challenges concerning the access to electricity. However, less attention has been paid in the extant literature to explore this phenomenon. The present study investigates the impact of access to electricity on labor productivity in Bangladesh in the presence of electricity constraints, electricity obstacles, and SME firm size. It employs the OLS regression and propensity score matching (PSM) technique for treatment effect to deal with the selection bias and endogeneity issue using the World Bank Enterprise Survey’s cross-sectional firm-level data for 3196 sample firms over the period of 2007–2013. The results provide evidence in support of SMEs’ labor productivity in response to electricity access. Lack of electricity access was partially found to affect SMEs’ labor productivity significantly negatively. Further, the results show a positive impact of firm size on firm performance. However, results from this model appear that constrained SMEs’ access to electricity has a negative relationship with firm performance. The article then suggests several policy implications on changing government regulations regarding the efficient use of renewable energy resources to enhance electricity generation for optimized SME performance and sustainable economic development in Bangladesh.

Suggested Citation

  • Mohammad Abir Shahid Chowdhury & Shuai Chuanmin & Marcela Sokolová & ABM Munibur Rahman & Ahsan Akbar & Zahid Ali & Muhammad Usman, 2021. "Unveiling the Nexus between Access to Electricity, Firm Size and SME’s Performance in Bangladesh: New Evidence Using PSM," Energies, MDPI, vol. 14(20), pages 1-16, October.
  • Handle: RePEc:gam:jeners:v:14:y:2021:i:20:p:6493-:d:653221
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