Industry features and energy efficiency in Indian small enterprises

Abstract

PurposeHow do energy consumption, efficiency and economic performance vary between small enterprises belonging to two different product clusters whose production process and technologies differ?Design/methodology/approachThe objectives are analyzed based on empirical data gathered from a field survey of small enterprises with reference to auto ancillaries in Shimoga and brick‐making enterprises in Malur of Karnataka State in India. Simple averages, correlation and multiple‐regression techniques are used for the analysis.FindingsThe study brought out that higher energy intensity results in higher share of energy cost in total variable cost. Energy intensity had a negative relationship with value of output. Energy makes a statistically significant contribution to returns to scale. The classification of small enterprises into two groups based on above average energy intensity and below average energy intensity, and the subsequent regression analysis brought out that energy intensity had a positive influence on returns to scale in auto ancillaries whereas a negative influence on returns to scale in bricks enterprises.Research limitations/implicationsThe sample‐size formulation could not be done on a scientific basis due to the absence of comprehensive data on all small enterprises operating in the respective clusters and therefore, the findings may not be generalized.Practical implicationsIndustry specific characteristics must be taken into account while introducing “energy efficiency improvement” programmes as a means of enhancing competitiveness in “energy intensive” small enterprises.Originality/valueThe paper illustrates the scope for energy conservation and efficiency improvement in Indian small enterprises.