Leveling the playing field for small business is focus of Michael Gravier’s research

Marketing Professor Michael Gravier and two colleagues created a first-of-its-kind study to model the effectiveness of class waivers to the non-manufacturer rule (NMR) for small business.

Jul 29, 2020, by Jenna Buraczenski

Global supply chain expert Michael Gravier, Ph.D., Professor of Marketing, and two colleagues created a first-of-its-kind study to model the effectiveness of class waivers to the non-manufacturer rule (NMR) for small business.

NMR waivers act as an “equalizing mechanism” for government to protect small business distributors from large business competition for federal contracts. The class waiver exception allows small business distributors and wholesalers – that do not manufacture a given product – to supply that product for federal contracts if they purchase it from another domestic small business.

“They make it possible for small businesses to compete with the big guys."

Gravier’s co-authored paper, “Class waivers to the non-manufacturer rule: Effects on small business utilization in public procurement,” focused on how small business distributors can compete more successfully for government contracts. It was published research in the Journal of Small Business Management in March, in collaboration with Timothy G. Hawkins, Associate Professor of Marketing, Logistics, and Operations Management, G. Brint Ryan College of Business, University of North Texas; and William A. Muir, Assistant Professor, Graduate School of Business and Public Policy, Naval Postgraduate School.

Leveling the playing field

“Small businesses play a critical role in the supply chain, comprising 99 percent of all businesses and totaling approximately half of the private sector economy,” the article notes. “In industries dominated by large businesses, NMR waivers may provide an opportunity for small businesses to secure federal contracts.”

“They make it possible for small businesses to compete with the big guys,” explains Gravier.

Key findings

The researchers concluded that two factors contributed to the success of the class waiver program:

Price stability and the avoidance of high levels of industry price inflation: High industry-level prices nullified the positive effect that a class waiver to the NMR might otherwise have on small business utilization.
Industry composition and level of competition: When industry composition and competition is low, a waiver can produce an increase in small business utilization. When industry composition and competition is high, the issuance of a class waiver had no impact on the utilization of small businesses.