Mediating Effect of Energy Management on SME Development amid the Power Crisis in Sri Lanka: Lessons and Public Policy Insights

Abstract

This study investigates the multifaceted impact of power crises on the development of Small and Medium Enterprises (SMEs) in Sri Lanka, focusing on the period from March 2022 to February 2023 and examines how power shortages and load shedding affect SME productivity, employment, competitiveness, sustainability, and growth, by exploring the role of energy management in mitigating these adverse effects. Using quantitative methods, the study analyzes survey data of 143 SMEs selected through convenience sampling in the Western Province of Sri Lanka. The findings highlight the significant negative impact of power crises, revealing reduced productivity, diminished employment opportunities, decreased competitiveness, and obstacles to business sustainability and growth. Notably, the study demonstrates the positive effect of energy-efficient practices in mitigating the impact caused by power crises. The study provides further evidence that the negative influence of power-related issues is consistent across different SME sizes and industries. These insights have important policy implications, suggesting the need for collaboration between the government and the private sector to address SME challenges. The study underlines the importance of investing in power infrastructure, promoting economic diversification, and encouraging sustainable business practices. Furthermore, long-term planning, financial literacy initiatives, and targeted support to ensure the resilience and development of SMEs in the face of power crises are suggestive. Keywords: Energy Crisis, Energy Management, Public Policy Insights, SME Development, Sri Lanka