The Effect of Electric Power Fluctuations on the Profitability and Competitiveness of SMEs: A Study of SMEs within the Accra Business District of Ghana
Doe Frederick, Asamoah Emmanuel Selase
Keywords:
Electric power, power fluctuations, profitability, competitiveness, cost
Abstract:
The economy of Ghana has attained a middle-income status and is seeking to advance; hence,
an analysis of the economy based on the supply chain management of energy is significant to
provide the quantitative results and comprehensive information about how and where the energy
use affects economic growth and development. This information is necessary to enable the
government to respond promptly with measures that will improve the supply of energy to ensure
the profitability and competitiveness of firms. The objective of this paper is to analyse the effect
of electric power fluctuations on the profitability and competitiveness of SMEs, using SMEs
operating within the Accra business district of Ghana as a case study. This research is a crosssectional
survey and it adopted a mixed method approach. A sample of 70 Ghanaian SMEs was
selected using a systematic sampling approach. Inclusion criterion for the selection of the SMEs
was their location within the business district of Accra as well as their use of electricity in their
main business operation. Data was collected with an interviewer-administered structured questionnaire
which focused on the effect of power fluctuation on the operations of SMEs, especially
on the profitability and its resulting effect on the firms’ competitiveness. The SPSS statistical
package was used to group and analyse the data. The study is a single-factor analysis of the exogenous
problems facing the Small and Medium Enterprise sector. The study found that without
reliable energy supply, SMEs are unable to produce in increased quantities and quality leading
to poor sales hence low levels of profitability. It is established that low profitability negatively
affects Return on Assets (ROA) and Return on Investment (ROI) of SMEs. Consequently, if the
level of profitability is high, it is expected that ROA and ROI will be high and vice versa. With
high profits, SMEs are able to increase their competitiveness.
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10.7441/joc.2014.03.03
Doe F., Asamoah E.S. (2014). The Effect of Electric Power Fluctuations on the Profitability and Competitiveness
of SMEs: A Study of SMEs within the Accra Business District of Ghana. Journal of Competitiveness, 6 (3), 32-48 https://doi.org/10.7441/joc.2014.03.03
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