Title: The effect of blackouts to the benefit of digitalisation on the micro and small enterprises productivity

Authors: Eny Sulistyaningrum; Esa Azali Asyahid

Addresses: Faculty of Economics and Business, Department of Economics, Universitas Gadjah Mada, Yogyakarta, 55281, Indonesia ' Faculty of Economics and Business, Department of Economics, Universitas Gadjah Mada, Yogyakarta, 55281, Indonesia

Abstract: This study investigates the detrimental effects of electricity blackouts on the productivity benefits of digitalisation, specifically through internet adoption, among small businesses. The data for this analysis were drawn from a survey of micro, small, and medium-sized enterprises (MSEs) in Yogyakarta, Indonesia. As blackout incidence and internet adoption status are endogenous, we employ a multivariate regression framework that controls for a comprehensive set of potential confounders. Our findings show that MSEs experiencing more frequent blackouts capture significantly smaller productivity gains from internet adoption. Blackouts appear to have reduced by around half the potential productivity improvements associated with internet use. These results highlight an additional and important channel through which electricity shortages impair firm performance.

Keywords: blackout; MSEs; micro and small enterprises; digitalisation; internet; productivity.

DOI: 10.1504/IJGSB.2025.150131

International Journal of Globalisation and Small Business, 2025 Vol.15 No.2, pp.207 - 221

Received: 11 Mar 2024
Accepted: 06 Nov 2024
Published online: 01 Dec 2025 *

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