Journal of Business Ethics
Attraction or Distraction? Corporate Social Responsibility in Macao's Gambling Industry --Manuscript Draft--
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Attraction or Distraction? Corporate Social Responsibility in Macao's Gambling Industry
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Corporate Responsibility: Theoretical/Qualitative Issues - Adam Lindgreen
Keywords:
Corporate social responsibility; controversial industries; gambling; legitimacy; legitimation; responsible gambling.
Corresponding Author:
Tiffany Cheng Han LEUNG, Ph.D University of St Joseph Macau, China MACAO
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Tiffany Cheng Han LEUNG, Ph.D Robin Stanley SNELL, Ph.D
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This paper attempts to investigate how and why organisations in Macao's gambling industry engage in Corporate Social Responsibility (CSR). It is based on an in-depth investigation of Macao's gambling industry with 49 semi-structured interviews. We found that firms within the industry were emphasizing pragmatic legitimacy based on both economic and non-economic contributions, while glossing over adverse externalities among visitors, such as problem gambling and health-related risks. By engaging symbolically rather than substantively in CSR, the gambling firms were diverting attention away from issues of moral legitimacy, in order to be allowed to continue to pursue 'business as usual' as a means of obtaining substantial financial returns.
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Attraction or Distraction? Corporate Social Responsibility in Macao’s Gambling Industry
Tiffany, Cheng Han LEUNG Faculty of Leadership and Administration, University of St Joseph, Macao
&
Robin Stanley SNELL Department of Management, Lingnan University, Hong Kong
Biographical Details: Tiffany, Cheng-Han LEUNG is a Lecturer in the Faculty of Administration and Leadership at the University of Saint Joseph, Macao. She gained her doctorate from the School of Management at the University of St Andrews (Scotland) in 2014. Her research interests are in Corporate Social Responsibility, Corporate Social Disclosure, the Gambling Industry, and Business Ethics. Robin Stanley SNELL is a Professor of Management in the Faculty of Business at Lingnan University, Hong Kong. He obtained his PhD from the University of Lancaster, UK. Besides Business Ethics, his other interests are Organizational Learning, Service Leadership Education, and Qualitative Organization Studies.
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INTRODUCTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Controversial industries have been defined as those offering “products, services or concepts that for reasons of delicacy, decency, morality, or even fear, elicit reactions of distaste, disgust, offence or outrage when mentioned or when openly presented” (Wilson and West, 1981, p. 92). Such industries typically break social taboos, provoke moral debates, and are subject to political pressures (Cai et al., 2012). Although the delineation of controversial industries varies over time (Campbell, 2007) and between cultures (Waller, et al, 2005), depending on the criteria adopted (Jo and Na, 2012), gambling is a quintessentially controversial industry, illegal in many countries, and facing challenges to its legitimacy in many jurisdictions where it is legal (Reith, 2007).
Corporate Social Responsibility (CSR), “a concept whereby companies integrate social and environmental concerns in the business operation and in their interactions with their stakeholders on voluntary basis” (The Commission of the European Communities, 2001, p. 6), may be regarded as a strategic response to criticisms levelled at corporations. Whether firms within controversial industries should or should not adopt CSR is itself a controversial issue (Cai et al., 2012). Some commentators have argued that CSR engagement by such firms inherently lacks credibility because of the morally dubious character of their products or services (Jo and Na, 2012, p. 442), and that everything currently done by such firms in the name of CSR should be replaced by rigorous and comprehensive governmental regulation and intervention (Cai et al., 2012, p. 468). Governments already exert institutional power over casinos through licensing, and issuing and enforcing regulations (See Pfeffer and Salancik, 1978; Singh et al., 1986; Baum and Oliver, 1991; Deephouse, 1996), in order to protect citizens’ rights and welfare (Crane et al., 2004).
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This paper responds to calls for the rigorous investigation of CSR practices in controversial 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
industries (Banerjee, 2007; Devinney, 2009). We shall draw on legitimacy theory (Miller and Michelson, 2012; Reast et al., 2012) to investigate the motivations and strategies for the adoption of CSR by gambling firms in Macao, a Special Administrative Region of China, which is by far the world’s largest gambling market, with a gross gambling revenue six times more than that of the Las Vegas Strip (The Economist, 2013).
This paper is structured as follows. Following this introduction, the next section provides a review of the literatures on gambling, CSR and organizational legitimacy. After this, there is a section on research design, which explains the rationale for a qualitative study based on interviews with 30 internal stakeholders from six gambling firms in Macao and 19 external stakeholders. This is followed by sections on findings, discussion, and conclusions.
LITERATURE REVIEW Debates about CSR CSR overlaps with other concepts, such as corporate citizenship, business ethics, and sustainability, lacks a clear dominant paradigm (Lockett et al., 2006, p. 133) and is essentially a contested concept (Birch and Moon, 2004, p. 19). Authors following Friedman (1970) confine the duties of a socially responsible corporation to those of maximising shareholder wealth, with no requirement to serve the public interest (Banerjee, 2007, 2008; Crane and Matten, 2004; Henderson 2001), and Sternberg (2000) claims that a corporation’s use of its resources for non-financial purposes may be regarded as theft of the owners’ property. Stakeholder theorists such as Freeman (1984) claim, to the contrary, that CSR involves balancing the interests of stakeholders, defined as the various groups that affect the firm, and/or are affected by it (Freeman, 1984).
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
An instrumental version of the stakeholder model (Donaldson and Preston, 1995) has gained sway, based on the assumption, sometimes referred to as “the business case” for CSR (Kurucz et al. 2008), that achieving balance in serving different stakeholders’ needs can ultimately enhance a corporation’s financial performance (Gray and Milne, 2004), and thus meet its shareholders’ needs (Freeman, 2010). The mediating variables that are positively influenced by CSR are said to include corporate reputation (Brammer and Millington, 2005; Cai et al., 2012; Fombrun and Shanley, 1990; Hanlon and Fleming, 2009; Jo and Na, 2012; Kurucz et al., 2008; Turban and Greening, 1997), employee productivity (Brammer and Millington, 2005; Lertzman and Vredenburg, 2005), cost reduction (Carroll and Shaband, 2010; Smith, 2005), and risk reduction (Cai et al., 2012; Jo and Na, 2012). Thus the nub of the business case for CSR is the argument that firms must engage in CSR in order to fully address the complex demands of the market economy (Carroll et al., 2012), continue to create value (Kurucz et al., 2008), and maintain competitiveness (Brammer and Millingon, 2005; McWilliams and Siegel, 2001; Porter and Kramer, 2002). Besides using CSR in government relations and consumer marketing, firms may also use CSR as a means for attracting and retaining talent (Gond et al., 2010; Greening and Turban, 2000; Moon et al., 2011; Porter and Kramer, 2002; Turban and Greening, 1997; Vong, 2010).
While the business case for CSR thus urges corporations to “do well by doing good” (Kurucz et al., 2008), and is reflected in the contemporary expectation that corporations should report their social and environmental performance as well as their financial performance (Elkington, 1997), controversies persist. Some commentators argue that major corporations, typically MNCs, are so powerful (Crane et al., 2008; Donaldson and Preston, 1995) that they can neglect social and environmental needs (Gray et al., 1996), while pursuing narrow financial
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interests (Bondy et al., 2012; Gray and Milne, 2004). Others argue that corporations treat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
CSR as an expedient tool that can be dispensed with if it ceases to meet their profitability criteria (Palazzo and Richter, 2005), or that they adopt CSR as a ‘smokescreen’ or as ‘window dressing’, in order to cover-up their irresponsible actions (Banerjee, 2008).
Gambling as a major industry Gambling has been part of people’s lives since ancient times (Schwartz, 2006), but has only emerged as a major industry during the last century (Galvin et al., 2004-5; Reith, 2007). The industry prefers the term “gaming” with its connotation of entertainment and leisure, rather than “gambling” with its connotation of financial loss (Reith, 2007). We shall call a spade a spade. Gambling takes various forms, including casino table games, lotteries, sports betting, bingo, and online gambling (MarketLine, 2014b). The global gambling sector had total revenues of US$399.4 billion in 2013, with a compound annual growth rate (CAGR) of 5.4% between 2010 and 2013 (MarketLine, 2014b). It is significantly larger than the global alcoholic drinks sector (US$ 1,142,952.9 million) (MarketLine, 2014a).
Economic and social benefits arising from the gambling industry include tax revenue, job creation and sponsorship of public services (Beem and Mikler, 2011; Blaszczynski et al., 2004; Korn and Shaffer, 1999). From a utilitarian viewpoint, it has been argued that the socio-economic benefits of gambling activity outweigh the corresponding costs (Schwartz, 2003). Others disagree. The industry creates major socially undesirable externalities, notably “problem gambling” (Hing, 2001; Reast et al., 2012). Although the incidence of problem gambling is no more than around 2% in the developed world (Blaszczynski et al., 2011; LaPlante et al., 2011), it has been estimated that a single problem gambler, on average, has a direct negative impact on as many as 10 to 17 other people, typically family, friends, and
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employers (Shaffer and Korn, 2002). Grinols and Mustard (2001) calculated that the social 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
costs of gambling activity were 1.9 times higher than social benefits of gambling.
By comparison with the tobacco industry, which is subject to the Framework Convention on Tobacco Control (FCTC) developed by the World Health Organisation (WHO), which sets international standards on operations, marketing and legal compliance (Moerman and Van Der Laan, 2005), the gambling industry lacks an international regulatory framework (Moon et al., 2011). The promotion of ethically responsible practices within the industry thus depends on a combination of voluntary self-regulation, and action by host national or local governments (Moon et al., 2011).
CSR in the gambling industry CSR has been investigated in other controversial industries, such as nuclear power (Banerjee and Bonnefous, 2011), the military (Byrne, 2010) pornography (Davidson, 1996), tobacco (Palazzo and Richter, 2005; Pava and Krausz, 1997), and brewing (Quaak et al., 2007). CSR in the gambling industry has also received attention (Cai et al., 2012; Jo and Na, 2012; Jones et al., 2009; Soriano et al., 2012). Some studies of CSR in the gambling industry have focused on the impact on financial performance (Lee and Park, 2009). Others have investigated the impact of CSR on consumers’ perceptions of gambling (Li et al., 2011; Soriano et al., 2012), and on casino employees’ perceptions of responsible gambling (Breen et al., 2005; Giroux et al., 2008; Hing and Nuske, 2011; LaPlante et al., 2011). Reast et al. (2012) examined the strategies employed by the gambling industry and by opposing stakeholder groups in seeking organisational legitimacy in the context of a proposed supercasino project in the UK, which ultimately fell through.
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Gambling firms around the world have been operating “responsible gambling” programmes, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
based on industry-wide codes of practice (Blaszczynski et al., 2011), such as that of the American Gaming Association (2013). According to Blaszczynski et al. (2004, p. 308), such programmes have been “designed to prevent and reduce potential harms associated with gambling; (and they) often incorporate a diverse range of interventions designed to promote consumer protection, community/consumer awareness and education, and access to efficacious treatment”. Critical analyses have indicated, however, that the CSR programmes adopted by gambling firms have been largely oriented toward protecting financial interests. For example, Hing (2001) found that managers of gambling clubs in New South Wales, Australia, were emphasizing economic and legal responsibilities rather than ethical and discretionary ones (Carroll, 1991), and that most clubs were doing relatively little to address problem gambling even though they were nominally operating responsible gambling programmes. Miller and Michelson (2012) cast doubt on the effectiveness of the responsible gambling programmes of firms in the Australian electronic gaming machine sector, in terms of their social impact. Hancock et al. (2008) found that the social impact effectiveness of responsible gambling programmes varied considerably between countries, and even between gambling venues within particular countries, depending both on the amount of government pressure and on the extent to which firms had been committing to constructive voluntary action.
Organisational legitimacy Organizational legitimacy has been defined as “congruence between the social values associated with or implied by [organizational] activities and the norms of acceptable behaviour in the larger social system of which they are part” (Dowling and Pfeffer, 1975, p. 122; Parsons, 1960, p. 175). Legitimacy thus extends beyond conformity with formal laws to
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harmony with broader social norms and ‘maxims’ (Weber, 1978). Bitektine (2011, p. 152) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
defines legitimacy as “actors’ perceptions of the organisation, as a judgement on the organisation, or as the behavioural consequences of perception and judgement,” while Suchman (1995, p. 574) similarly defines legitimacy as a generalised perception or assumption that a corporation’s actions are desirable, proper or appropriate. Suchman (1995) identifies three types of organisational legitimacy. One is pragmatic legitimacy, based on the calculations of self-interested stakeholders. Another is moral legitimacy, based on judgements about whether organisational activities are the right thing to do within a set of accepted social values. The third is cognitive legitimacy, based on the extent to which an organisation and its activities are judged to be “necessary or inevitable based on taken-forgranted” assumptions (Suchman, 1995, p. 582).
Organizations face legitimacy gaps whenever their perceived behaviour falls short of generally-assumed social values and norms (Sethi, 1978). In such cases, firms may need to engage in legitimation in order to address coercive pressure, typically from governments, normative pressure, in order to comply with social expectations, and mimetic pressure, i.e., to follow the patterns and polices adopted by their institutional peers (DiMaggio and Powell, 1983). Firms in controversial industries thus recognize the need to close legitimacy gaps in order to gain, or continue to have, access to critical resources and markets (Dowling and Peffer, 1975; Lindblom, 1993; Meyer and Rowan, 1977; Singh et al., 1986; Suchman, 1995).
Suchman (1995) argued that the quest to gain, maintain, or repair legitimacy can operate at two levels: institutional and strategic. Institutional legitimation proceeds at a relatively macro level. It involves “sector-wide structuration dynamics”, which “transcend any single organisation’s purposive control” (Suchman, 1995, p. 572), and which generate cultural
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pressures, through which organisations gain legitimacy vis-à-vis different stakeholder groups 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
by becoming isomorphic with their institutional environment (DiMaggio and Powell, 1983; Meyer and Rowan, 1977, 1991; Meyer and Scott, 1983).
Strategic legitimation operates at a relatively micro-level of analysis, and refers to managers’ deliberate attempts to gain societal support for their organisation. Besides adopting substantive policies that are seen as likely to gain social approval, this typically involves the manipulation of symbols (Ashforth and Gibbs, 1990; Dowling and Pfeffer, 1975; Suchman 1995), such as the ‘framing’ of issues and arguments (Fiol, 1994, p. 404) in ways designed to evoke the desired “schemata of interpretation” (Snow et al., 1986) and to create favourable impressions among targeted stakeholders (Elsbach and Sutton, 1992; Fiss and Zajac, 2006; Oliver, 1991; Suchman, 1995). The latter may include government authorities, the media and market stakeholders (Bitektine, 2011; Deephouse and Suchman, 2008). Gaining legitimacy in the eyes of the public can be regarded as a means of reducing opposition to a controversial industry’s expansion (Weaver et al., 1999) as in the case of the tobacco industry (Palazzo and Richter, 2005) and the gambling industry (Reast et al., 2012).
Firms in controversial industries may, accordingly, engage in symbol manipulation in an attempt to alter perceptions of their corporate identity (O’Donovan, 2002, p. 349; Palazzo and Richter, 2005). This can involve a mixture of stakeholder education about firms’ socially desirable actions or impacts (Ashforth and Gibbs, 1990; Miller and Michelson, 2012; Moerman and Van Der Laan, 2005; Palazzo and Richter, 2005; Reast et al., 2012), and stakeholder distraction away from their socially undesirable actions or impacts (Elsbach and Sutton, 1992; Lindblom, 1993; Miller and Michelson, 2012; Milne and Patten, 2002).
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CSR as a means of legitimation for gambling firms 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Organisations can adopt CSR practices, such as philanthropy, as means of strategic legitimation to symbolise that they are “not all that bad” (Ashforth and Gibb, 1990; Campbell et al., 2003; Dowling and Pfeffer, 1975; Palazzo and Richter, 2005; Reast et al., 2012). Indeed, this kind of impact on moral legitimacy has been identified as a key yardstick for assessing the effectiveness of CSR (Palazzo and Richter, 2005). Accordingly, the tobacco industry (Palazzo and Richter, 2005) has attempted to employ CSR as ‘sanitisation’, in order to reduce dissonance about harmful health impacts (Hanlon and Fleming, 2009) and to attain a “business as usual” identity (Dowling and Pfeffer, 1975). CSR as sanitisation might also be employed by the gambling industry to counteract its historical associations with gambling addiction, drug usage, prostitution and other crime (Collins, 2003; Reith, 2007).
Firms in controversial industries nonetheless face a legitimation dilemma. They may incline to avoid drawing attention to the “darker side” (Palazzo and Richter, 2005). However, if they are perceived as ignoring the issues that gave rise to their legitimacy gaps, they run the risk of having their CSR practices perceived as nothing more than empty public relations gimmicks (Banerjee, 2007; Palazzo and Richer, 2005; Reast et al., 2012).
How, then, do gambling firms manage the balancing act of influencing “the meaning construction of others toward preferred redefinition of organisational reality” (Gioia and Chittipeddi, 1991, p. 442) in order to enhance the acceptability and legitimacy of their morally-contested industry (Galvin et al., 2004-5; Reith, 2007)? Thus far, there have been relatively few studies (Du et al., 2012; Miller and Michelson, 2012; Reast et al., 2012) of CSR as a means of legitimation for organisations in the gambling industry, and none in
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Macao. This paper addresses two research questions: (1) Why do organisations in Macao’s 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
gambling industry engage in CSR? (2) How do they do so?
Suchman (1995) argues that it is more difficult to establish moral legitimacy than pragmatic legitimacy, and even more difficult to establish cognitive legitimacy than moral legitimacy. We may add that for controversial industries, achieving cognitive legitimacy is almost impossible, since the failure to establish that the organization “pursues goals and activities that fit with broad social understandings of what is appropriate, proper, and desirable” (Suchman 1995), is what defines such industries as controversial. Given this “path of least resistance”, yet the need also to establish a respectable corporate reputation (Brammer and Millington, 2005; Cai et al., 2012; Fombrun and Shanley, 1990; Hanlon and Fleming, 2009; Jo and Na, 2012; Kurucz et al., 2008; Turban and Greening, 1997), we developed the following propositions about the orientation of the CSR policies of gambling firms in Macao: P1
Gambling firms in Macao orient their CSR policies primarily toward pragmatic legitimation vis-à-vis powerful stakeholders, who might otherwise exert difficult coercive demands.
P2
In order to achieve a sufficient level of moral legitimacy, the CSR policies of gambling firms in Macao quietly manipulate symbols in order to signal to governments their concern to limit negative social impacts. However, because the firms do not wish to deter potential customers, they downplay this concern among the gambling public, who are their main market stakeholders.
We shall draw on legitimacy theory to interpret qualitative data obtained from semistructured interviews with members of internal and external stakeholder groups.
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Macao’s gambling industry 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Macao is a former Portuguese colony and trading port (Hobson, 1995). Following the legalisation of gambling in the colony around 1850, the Portuguese government granted a monopoly licence first to Tai Heng in 1937, then to Stanley Ho in 1962 (Hobson, 1995; Gaylord, 2008). The latter’s monopoly ended in 2002 after Macao became a Special Administrative Region (SAR) within the People’s Republic of China (PRC) in 1999, under a “one country, two systems” agreement (Fallows, 2009). The three largest US gambling operators, namely MGM Grand Paradise, Las Vegas Sands and Wynn Resorts, subsequently invested in Macao, employing a “Las-Vegas” style, which integrates casinos, hotels and resorts (Ernst and Young, 2009). Given limited territorial space, the government of Macao expanded onto reclaimed land to construct casinos and integrated hotel resorts (Gaylord, 2008; The Government of Macao Special Administrative Region Statistics and Census Service, 2013). The total number of casinos increased twofold with 35 casinos in 2013, while the number of gambling tables and slot machines grew from 1,092 and 2,254 in 2004 to 5,485 and 16,585 in 2012 respectively (The Government of Macao Special Administrative Region Statistics and Census Service, 2013).
In 2003, the Chinese government established a “Free Travel Scheme” (FTS) to allow Chinese visitors to visit Macao independently for durations of up to one week (Gu and Tam, 2011; Vong, 2010). Since then, the customer base for the casinos has been dominated by visitors from mainland China, the source of nearly 90% of customers in 2010 (The Macao Government Information Bureau, 2010). Macao is the only place in China where it is legal to gamble in casinos, and in mainland China the industry has only one major substitute, a national lottery (Vong, 2004; BBC, 2009; MarketLine, 2014b). Given the deeply-rooted
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subculture of gambling in Chinese culture (Raylu and Oei, 2004; Lau and Ranyard, 2005; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Papineau, 2005), Macao has proven very attractive to Chinese visitors.
All concessionaires and other sub-concessions are required to contribute a gaming tax of 35 percent to the government and provide an additional 5 percent of their gross gaming revenue for other social and cultural activities (The Macao Government Information Bureau, 2010). The gambling industry contributes 85% of Macao’s Gross Domestic Product (GDP) and 75% of government revenue (Macao Business Daily, 2014). While the casinos dominate Macao’s industrial landscape, the so-called “junkets” operate in its shadows. The junkets provide transportation, accommodation and confidential loan services to the so-called “VIP high rollers” and “big customers”, and as concessionaries and sub-concessionaires, have signed joint-venture contracts with the gambling firms to operate “VIP Gaming Rooms” within the casinos. Over 60% of gaming revenues are attributable to the VIP rooms, rather than the mass market (The Economist, 2013). According to the World Bank (2014), Macao has the world’s highest Gross Domestic Product (GDP) per capita at US$ 142,564, followed by Qatar (US$ 131,758) and Luxembourg (US$ 90,790). Around 25% of Macao’s residents work in posts that are directly related to the gambling industry (The Government of Macao Special Administrative Region Statistics and Census Service, 2014; Wan, 2009; Wu and Wan, 2008).
Regarding socially undesirable externalities, the prevalence rate of problem gambling in Macao was assessed as 6.0% in 2007, which was greater than that in Hong Kong (4.5%), Singapore (2.9%) and Australia (1.5%) (The Institute for the Study of Commercial Gaming, 2009; Miller & Michelson, 2012). The social cost of problem gambling in Macao was estimated to be US$40 million in 2003 and to have increased almost threefold by 2007, with
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strongly adverse impact on neighbouring countries, particularly mainland China (Fong et al., 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
2011).
The significant increase in the incidence of problem gambling is attributable to the expansion of the gambling industry (Gu and Tam, 2011), combined with a relatively weak regulatory regime (Matten & Moon, 2008). The pre-liberalisation era of Macao’s gambling industry was characterised by weak regulatory enforcement and poor governance (Fong et al., 2011). Currently, the Macao government’s heavy dependence on tax revenues from the gambling industry, which dominates the local industrial landscape, may constitute a disincentive against exerting tighter regulation, especially as the international gambling companies might otherwise consider relocation.
RESEARCH DESIGN Semi-structured qualitative interviews were adopted to answer the main research questions: how and why do organisations in Macao’s gambling industry engage in CSR? The qualitative approach sought to identify how interviewees framed, understood and explained salient issues, events, and patterns and forms of behaviour (Bryman and Bell, 2011). Interviewees were invited to participate in free and open conversations to express their opinions, experiences and thoughts (Bryman and Bell, 2007). The interviewer focused on interviewees’ own experiences and sought to elicit in-depth stories and accounts as illustrations and evidence (Rubin and Rubin, 1995).
Pilot interviews Prior to commencing the fieldwork, five pilot interviews with members of internal and external stakeholder groups were undertaken by the first author in July and August, 2010.
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These were not treated as part of the body of formal interviews, but were used to inform the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
refinement of the questions and guidelines that were adopted for the subsequent main interview study.
The pilot interviews yielded two key discoveries. The first was that none of the gambling companies had a coordinating centre that was responsible for CSR policies and practices. It appeared, instead, that responsibility for miscellaneous CSR issues was dispersed across various departments, such as Human Resources and Public Relations. The implication was that the main study sought to interview internal stakeholders from various departments.
The second discovery was that some interviewees did not recognise the term, “corporate social responsibility” or its acronym, CSR. Accordingly, for the main study, the first author designed different sets of questions for those who did or did not recognise the term (see Appendix 1 and Appendix 2).
Data collection for the main study For the main study, 49 interviews were conducted by the first author during 2011 in Macao. Among them, 30 were internal stakeholders, occupying diverse managerial and nonmanagerial positions across various departments in six Macao gambling companies (See Table 1). The remaining interviewees comprised 19 external stakeholders, including gamblers, social workers, government officials, academics, journalists, and labour union members (See Table 2). A diverse sample of interviewees was selected, in order to tap multiple perspectives and thereby foster deeper and more thoroughly-informed analysis (Boeije, 2002; Guba and Lincoln, 1994).
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Insert Table 1 about here -------------------------------------------------------------Insert Table 2 about here -------------------------------The interviewees were obtained via three channels: personal contact, a formal letter, and a snowball sampling technique (Bryman and Bell, 2007). The interviews lasted between 30 and 120 minutes, depending on the interviewees’ degree of knowledge and willingness to share information. Interviews were held at various locations at the convenience of the interviewees. Most were conducted in Cantonese, some in English. All interviews were digitally recorded, transcribed and (wherever necessary) translated by the first author. Selected quotes for use in publication were checked via dialogue with a native English speaker to ensure clarity and accuracy.
Data analysis Nvivo 8 was employed to assist interview analysis. Although this software can help organise the data systematically, increase transparency, and enhance continuity, it neither performs critical thinking nor formulates conclusions (O’Dwyer, 2004). Thus the analysis required extensive human effort. The analytical procedure was inductive with three inter-related modes: data reduction, data display and data interpretation (Miles and Huberman, 1994).
Data reduction. Following interview transcription, this mode was conducted from October 2011 to January 2012) and comprised four steps. First, for each interview, an initial summary was developed that identified all the major themes referred to by the respective interviewees.
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Second, open codes were made at appropriate points in the transcripts and were subsequently 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
transferred to Nvivo 8. Third, over-arching codes were developed systemically, to represent different clusters of similar themes. Fourth, analytic themes were renamed after a reflection period to question earlier assumptions and analyses and consider the “big picture” (O’Dwyer, 2004).
Data display. This mode proceeded concurrently with data reduction and involved portraying the reduced data in a form of mind-maps with major themes. This helped to guide the systematic development of coherent explanations of the interview findings (O’Dwyer, 2004).
Data interpretation. This mode comprised four steps. First, the initial analytic themes were portrayed as a set of stories, to convey their richness and complexity. Second, these stories were constantly compared, contrasted and clarified, and conflicts, contradictions, and paradoxes between and among them were identified, leading to a reconfiguration of the themes. Third, a big picture analysis was carefully crafted around the reconfigured themes. Fourth, a narrative focusing on the reconfigured themes was constructed, drawing on legitimacy theory (O’Dwyer, 2004). This final step also considered the extant CSR literature as a check against potential researcher bias (Guba and Lincoln, 1994).
For triangulation purposes (Strauss and Corbin, 1998) the first author also reviewed 30 corporate annual reports over five years (from 2007 to 2011) for six selected companies, and constantly checked each corporate website to scan for relevant policy developments. The next section will present the findings from the semi-structured interviews about how and why these organisations engage in CSR.
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FINDINGS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Pillars that hold up the Macanese economy Internal and external stakeholders at various levels of seniority pointed out the contributions that the gambling firms, independently of CSR, had been making to the local economy, through job creation, workforce development, knock-on business for related industries, and generation of substantial tax revenue for the government of Macao.
“Six large companies in Macao control (and) ... influence the economic activities in Macao. ... So, we are in Macao clearly demonstrating economic growth.” (C1)
“We are the gambling operators and people have more job opportunity. Over the past ten years, we have increased the standard of living and salaries. People can how afford to buy a house.” (F2)
“Those people (employees) had been long term unemployed... We put them through intensive training programmes. ... That to me is a very good ethical way. We are not just recruiting. We have brought them up to work for us.” (A2)
A manager explained that business needs rather than corporate philanthropy constituted the underlying motivation for the gambling firms to invest in human resource development:
“The government keeps telling us or the community that we have to develop human resources [employees and young people]. This is not just for the small and mediumsized [enterprises] but also for the cash cow gambling operators because this benefits us in the long-term.” (F2)
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Several interviewees mentioned that Macao had become heavily dependent on the gambling industry.
“Macao depends on this industry and we (indirectly) pay all the civil servants. We contribute 40% of our gambling revenue to the government. A lot of local people depend on us. ... The whole economy depends on us.” (D3)
“The gambling industry also generates funds … for the development of technology and tourism and to improve infrastructure.” (Official 2)
“They make profit from the gamblers who lose their money. They create jobs and entertainment. They create wealth for the community as a whole and are creating a lot of tax revenue. ... Another point is that it (the casino industry) is very labour intensive. ... I don't know where these people would work if we didn't have casinos.” (Journalist 2)
CSR as a means to establish legitimacy Despite Macao’s economic dependency on the gambling firms, interviewees perceived that these firms needed to engage in CSR activities, in order to gain and maintain legitimacy visà-vis the Macao and Mainland Governments and the general public, and thereby justify the continuation of favourable government policies and decisions, such as increased quotas for imported labour, more land for business expansion, and the renewal of gambling licenses. Since the casinos were competing with one another for licences and market share, CSR was seen as a kind of competitive weapon:
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“Now, all of them have to do it [CSR] because we are competing with each other. We all want the government of Macao to help, like with labour issues or getting a new place to develop in the Cotai area. … If any conflict happens, the government may not help them, if they perform badly [in CSR] when the time is to renew [their] licenses.” (D3)
“(CSR is).... driven by the need to build up a good relationship with the (Macao) government. ... Keep the government happy.” (A3)
Some internal stakeholders, especially those working at middle and senior management levels in the MNCs, recognized the importance for the gambling companies of employing CSR as a means of gaining acceptance and support from the general public. For example:
“Having a good relationship with the community is good for their businesses. Then, I think where we talk about education and labour pool. You know it is such a small labour pool in a small resort. We can improve anything. It will help us eventually.” (A3)
“The gambling companies need to get Macao people to support because Macao people are the key stakeholder in the gambling industry. They can somehow determine the conditions of a social license to operate.” (D3)
Among the external stakeholders, two journalists suggested that Macao’s gambling industry was attempting to “promote itself as a normal industry” (Journalist 2) and “to portray itself as being a benefactor in Macao” (Journalist 4) in order to increase public acceptance.
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Some external stakeholders stated that it was also important for gambling firms to maintain 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
their legitimacy vis-à-vis the Mainland Chinese government. For example, a gambler pointed out that without the continued favourable policies of the Mainland government, casino profits would collapse, since nearly 90% of casino visitors were coming from mainland China (MarketLine, 2014b), hence a continuation of the ‘Free Travel Scheme’ policy was essential for the industry’s continued profitability.
“The industry all depends on Mainland China. … If the Chinese Central government cancelled the Free Travel Scheme Visas to Macao, they would lose major income.” (Gambler 2)
An academic expressed the belief that Macao was a good place to invest due to its economic structure. The international gambling companies appeared to have been building up good relationships with representatives of the Chinese Central government, who were stationed in Macao, in order to pave the way for future investments in mainland China. “The foreign companies win the trust of the Chinese Central government (mainland China). Macao is their first place to invest. If they operate very well, they can invest in mainland China easily.” (Academic 3)
Using CSR to attract and retain employees Attracting and retaining talent had become a key strategic issue for Macao’s gambling industry, because its rapid development of over the past decade had given rise to a high demand for labour, which had outstripped local supply. Interviewees identified two CSR strategies that were being used by the gambling firms to attract and retain employees.
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The first strategy involved improving the image of the gambling industry:
“If our company has a good image, I think that we can get more resources. It is easier for employees to apply to our company. I don’t believe that anyone wants to work in an inhumane place with no CSR practices.” (E3)
“We like to think we are the best employer in Macao. Part of that is our brand and how we can attract people. We can pay high salaries and some of our competitors have employees who are happy to join us.” (A3)
“They can improve their image to organize CSR activities that they can strengthen their presence in the eyes of employees and the Macao community.” (Journalist 4)
The second strategy involved providing employee training, welfare and recreational activities for employees. Most of the internal stakeholders in middle and junior management roles identified such activities as forms of CSR. For example:
“…We have training courses for employees, e.g. “How do you become a good supervisor?” We will have some language courses, e.g. English, Mandarin, and computer courses. These courses are outsourced.” (D2)
“If you work in the Western gambling companies, they provide health insurance, annual leave and sick leave for employees.” (E3)
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“The gambling companies have a lot of employees who are local citizens in Macao. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Sometimes, they organise social activities for employees and employees’ families as another way to give back to the community.” (Counsellor 1)
“In general, it’s for our own employees and we have staff social clubs. We provide the activities [for employees] because this [gambling] industry is open twenty-four hours a day, seven days a week and 365 days a year. We do provide as much as we can [for employees]. We have different courses, yoga classes that we provide at a special discount [for employees] … For mothers, we have free movie nights and BBQ.” (F2)
CSR as serving business interests and subordinate to them Using CSR as a means to establish legitimacy vis-à-vis the governments, the general public, and actual and prospective employees appeared to reflect the “business case” for CSR, as articulated in the CSR literature. Many interviewees indicated that they perceived corporate self-interest as the primary motivation for CSR engagement. They regarded CSR policies and practices primarily as means of furthering corporate interests and only incidentally as ways to meet the needs of the community and employees. For example:
“CSR is a good business decision because it helps the branding and the community in the eyes of the government. … CSR has to be purely self-interested.” (A3)
Interviewees also indicated that because of corporate self-interest, there were limits to the use of CSR. For example:
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“When the company’s survival comes into question, they will always pick survival over 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
ethical actions. There is a limit. There is a potentially limiting factor of the capitalist system that currently exists.” (C1)
“We won’t engage in CSR which conflicts with our self-interest. ... But, if the gambling companies are in a bad economic situation, they fire people. They do less charity work and they engage in CSR according to their financial ability and they won’t keep doing CSR.” (B1) “They can’t make profit from opening a Sanatorium or a nursery school.” (Labour Unionist 1).
“The gambling companies want customers to lose ... [I know] because I used to work in casinos. ... They say they want to stop gambling problems and promote RG, but they don’t really think so. .... Macao’s gambling industry is a profit-making business. It is different from the Hong Kong Jockey Club.” (Gambler 2)
Meeting institutional demands for CSR Subsidiaries of MNCs in the gambling industry were typically seeking legitimacy vis-à-vis their headquarters, through compliance with policies and practices institutionalized centrally (Kostova and Zaheer, 1999; Pfeffer & Salancik, 1978), including those pertaining to CSR (Moon, 2002; Welford, 2004). For example, one interviewee said:
“Actually, we have implemented many diversity programmes in the US and attach importance to the community. The CEO in Macao also pays attention to the contribution to the society.” (C2)
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However, other interviewees indicated that the policies and practices of subsidiaries were allowed to differ from those of the headquarters, reflecting the different institutional environments (Kostova and Zaher, 1999). For example, a CSR officer stated the following:
“Responsible gambling in (Nevada) Las Vegas is mandatory, while responsible gambling in Macao is voluntary. The Macao government doesn’t enforce us. The parent company encourages us to do so.” (B3)
Several external stakeholders opined that those gambling firms that were headquartered overseas were facing stronger governmental pressure to implement comprehensive CSR policies in their home-country than in their Macao-based subsidiaries. In other words, the regulatory pressures on the Macao gambling industry to operate CSR programmes were perceived as lagging behind more developed countries, such as Australia (The Productivity Commission, 1999), the US and the UK (Smith, 2009). For example, a journalist said:
“The gambling industry is very good at CSR and it is better than other local industries. … We can’t use local standards to judge. … Macao doesn’t have any power to evaluate these companies. … Are they reaching the global standard or are they worse than the US? We don’t know.” (Journalist 3)
Trumpeting philanthropy with help from local media When referring to the CSR activities that were being adopted in Macao’s gambling industry, interviewees typically mentioned corporate donations and sponsorships, employee volunteering, and other types of corporate philanthropy.
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“The Macao gambling industry pays attention to charitable donations, sponsorships, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
contribution to society, and educational support.” (F4)
“They [the gambling companies] have donated money or set up certain training programmes. Through some kind of volunteering work, [employees] visit the handicapped and ... invite some elderly to come to a free dinner party.” (Journalist 2)
Some internal stakeholders indicated that the gambling firms were using newspapers and videos, and media events such as TV shows to publicise the “social conscience” of the gambling industry. For example:
“If we donate money, we take a photo and put it in the newspaper. … We have a video in the staff rooms or offices which shows what we have donated to charity during the year.” (D4)
“The video shows the elderly having a buffet in a restaurant or kids making Easter eggs … We realised that our company did CSR activities.” (B2)
Other sources indicated that local media, which were receiving most of their advertising income from the gambling industry, were favourably disposed toward the gambling industry, preferring to highlight the economic and philanthropic contributions of the industry and downplaying community resistance and anti-gambling advocacy (see Humphreys, 2010, p. 505).
CSR as sanitization
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Many internal and external stakeholders believed that a major reason for gambling firms to 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
embrace CSR was to shift long-standing public perceptions away from the negative impacts of gambling towards more positive perceptions and thereby improve their corporate image.
“Corporate philanthropy can enhance our social status and reputation.” (B5)
“The gambling industry has a negative image. Our company knows this point so they make donations to balance this negative image.” (D4)
“I believe that CSR is an intangible asset which is a tool to build up a corporate image in the long term.” (E5)
“The nature of the business will always be attacked. [No] matter how much we contribute … because of its negative noise, we have to do a lot better to protect our company.” (F2)
“They don't donate money just because they are very nice people. … They do it because it is good for their image. … From a more cynical view, it is some kind of PR [public relations] or a marketing tool.” (Journalist 2)
Some interviewees also indicated, more specifically, that gambling companies were using CSR in conjunction with other promotion strategies as a means of symbol alteration to sanitise the otherwise sordid image of gambling. For example:
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“Being selfish, CSR can improve our corporate image. When we were young, casinos 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
were like a dirty place. Customers taking a gamble with their lives. We don’t want to give this image to the general public.” (C2)
“The gambling business has a perceived negative image … but you can change people’s perceptions … to move the focus away from gaming. … We want to change our image and to align ourselves with tourism, leisure, and recreation.” (F3)
“If individuals gamble heavily, they lose money, and then may have family violence, child abuse and crime. … CSR is especially important to balance the company’s return and the social conflict.” (Academic 2)
“Ideally, they will make sure that they don’t have problem gamblers. But, gamblers are flooding into their casinos. They donate a lot of money to charity … and they give back as much as possible to society.” (Journalist 2)
“One way of changing this image is to promote CSR events which have helped to improve its [the industry’s] image so the community perceives them as benefactors of the community.” (Journalist 4)
Propaganda framed as CSR Some internal stakeholders explained how, under the guise of “public education”, gambling firms were attempting to reframe gambling as a freely-chosen form of entertainment or leisure activity, rather than as a vice.
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“When we educate people about gambling, you know gambling is a choice. You know it 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
is not something wrong. … We are taught not to label the gamblers as doing bad things.” (F2)
“My boss taught us that gambling is an entertainment which is different from the early days. … Do you want your customers to lose all their money? … We hope to provide a leisure environment for customers to relax and enjoy.” (D2)
Targeting “Responsible Gambling” programmes at employees rather than visitors Interviewees characterized the “Responsible Gambling” programmes, which were being adopted in the casinos, as involving education, awareness-building, a written code of practice, and direct assistance to problem gamblers. The programmes were underpinned by training courses for senior delegates, run by the University of Macao in conjunction with the government of Macao. Delegates were expected to cascade the training inside their company. As explained by interviewees:
“I attended the two-week training course in “Responsible Gambling” organised by the University of Macao and the government. … I attended a seminar and then I put what I had learnt into practice to teach my team members in our company. The course took 3 hours.” (E5)
“The “Responsible Gambling Awareness Week” is organised by the University of Macao and the government authority every year. We support the government.” (C2)
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Officially, the Responsible Gambling programmes were being directed both at employees 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
and at the broader gambling public, thereby following international best practice (Blaszczynski, et al., 2011). Interviewees indicated however, that Responsible Gambling programmes were targeting employees. For example, one manager (F2) characterised employees as “the most vulnerable” group, while a director stated:
“Our company gets feedback from social service organisations. Most users of the services are employees working in the gambling industry rather than casino guests.” (A1)
Interviewees identified three main reasons for focusing the Responsible Gambling programmes on the protection of employees. First, casino employees were permitted to gamble, both within and outside the casinos (Wu and Wong, 2008). Second, gambling by frontline employees in the Macao casinos, who make up 56% of the workforce in such establishments (The Government of Macao Special Administrative Region Statistics and Census Service, 2014), may be one way for them to cope with stressful working conditions, involving exposure to abusive customers and to passive smoking in the workplace (Macao Workers’ Union, 2010). Third, most customers were visitors from mainland China and would take any problems away with them when they left Macao:
“… A high percentage of gamblers coming through from this property [casino] are not from Macao. … 90% of the gamblers here are from PRC [mainland China]. They go home and they take the problems with them. We don’t have to see those people on the street” (A3)
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Such comments suggested that the Responsible Gambling programmes were largely symbolic 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
(Ashforth and Gibbs, 1990), and since they involved relatively little effort in proportion to the magnitude of the problem, they could even be characterised as “window dressing” (Banerjee, 2008). Furthermore, the discreet approach adopted for promoting Responsible Gambling was seen as a way to avoid contradicting other messages that were projecting images of gambling as human pleasure and entertainment rather than as a potential addiction trap and source of financial ruin.
Discussion Interviewees identified two inter-related moral legitimacy gaps (Galvin et al., 2004-5; Reith, 2007; Sethi, 1978) for the gambling firms. The first was associated with the presence of massive negative externalities, such as gambling addiction. The second was associated with unfavourable images of the core business of gambling as a risky, loss-making activity for customers. According to interviewees, gambling firms were not directly seeking to close these legitimacy gaps. Instead, they were adopting CSR vis-à-vis five main stakeholder groups, namely: the Macao government, the PRC government, the respective parent companies (overseas HQs), the general public, and current and prospective employees. It thus appeared that the gambling firms were adopting two broad strategies for achieving legitimacy. First, they were highlighting areas where they were meeting stakeholders’ pragmatic expectations. Second, under the rubric of CSR, they were manipulating cognitive symbols to represent gambling as a mainstream industry that was offering both pleasure and protection to customers. Figure 1 encapsulates this underlying rationale for the adoption of CSR by the gambling firms. ------------------------------Insert Figure 1 about here -------------------------------30
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Interviewees attributed various economic and non-economic expectations to the different stakeholder groups. Each row in Table 3 sets out the perceived pragmatic expectations of particular stakeholder groups, and the corresponding expected payoffs for the gambling firms of meeting these expectations. For example, interviewees perceived that the gambling firms were meeting the expectations of the Macao government in terms of tax revenue generation, economic development and philanthropy, while also complying with requirements to address problem gambling, and that in return for these contributions, they were being granted access to labour and land, and had grounds for optimism regarding the renewal of gambling licenses.
Interviewees perceived that the CSR policies and practices of the gambling firms were being primarily oriented toward achieving pragmatic legitimacy vis-à-vis particular stakeholder groups, but had the secondary aim of achieving some degree of moral legitimacy by demonstrating that they were meeting the non-economic pragmatic expectations of other groups. For example, interviewees implied that meeting the pragmatic expectations of the Macao public might help the gambling firms to achieve some moral legitimacy vis-à-vis their employees. ------------------------------Insert Table 3 about here -------------------------------Interviewees also conveyed the impression that the weakness of the regulatory enforcement by both governments and the weakness of the mimetic pressure to comply with more rigorous social responsibility practices adopted at the respective corporate HQs were allowing the gambling firms to avoid their corporate responsibility to tackle and prevent gambling addiction. Comments indicated that the gambling firms’ CSR programmes and related media
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promotions had been designed for the primary purpose of serving corporate self-interest by 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
distancing themselves from criticism and reducing the likelihood of public opposition (Palazzo and Richter, 2005). They implied that the gambling firms’ Responsible Gambling programmes were forms of “window dressing” rather than sincere efforts to address problem gambling (see Ashforth and Gibb, 1990). Furthermore, they also implied that by targeting employees as potential victims, rather than visitors from Mainland China, who comprised most of their customers and therefore the great majority of problem gamblers, these programmes were actually smokescreens that were being used to divert attention away from the scale of the adverse externalities, thereby allowing harm to persist (Moerman and van der Lann, 2005) among this massive but neglected stakeholder group.
CONCLUSIONS Drawing on legitimacy theory to analyse stakeholders’ perceptions of the gambling industry in Macao, we have identified three main features of the gambling firms’ use of CSR as a strategic response to legitimacy gaps. First, as summarised in Table 3, the gambling firms were seen as addressing various economic and non-economic demands in order to establish pragmatic legitimacy vis-à-vis key stakeholder groups. Second, they were seen as giving a low profile to their responsible gambling programmes, in order to avoid drawing attention to this as a negative externality. Third, they were using “public education” to redefine the nature of gambling, and to divert public attention away from the questionable moral legitimacy of their core business model. Stakeholders perceived that the gambling firms had been adopting a form of propaganda to reframe gambling as a matter of free choice, and recreation, rather than as a risk-laden vice. From a critical perspective, casting self-serving propaganda as “education” might be considered to be a form of corporate deceit, using symbol manipulation and alteration (Dowling and Pfeffer, 1975; Ashforth and Gibbs, 1990; Suchman 1995) to
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serve the interests of the people who own the organisations “at the expense of whomever 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
does not” (Banerjee, 2008).
Overall, it appeared that the CSR policies and practices of gambling firms in Macau were proceeding on the basis of self-governance (Gond, et al, 2011) and were being performed in a relatively informal manner (Matten and Moon, 2008) in the context of local norms and institutions that were relatively less rigorous than in other locations, such as Australia, Singapore and the USA (Henderson, 2012). However, the governments of Macao and the PRC have come to recognize the presence of adverse externalities, such as problem gambling among PRC residents who travel to Macao and bring their problems back to the Mainland. Thus we anticipate that unless the industry voluntarily adopts more rigorous programmes to reduce negative externalities, such as gambling addiction, at some point in the future it is likely to face substantially tougher regulation from the governments of Macao and the PRC. Alternative sources of regulation might include (1) transnational regulation by home country governments that could strongly affect the content of CSR initiatives (Gond et al., 2011) and (2) global self-regulation by the industry that could induce gambling firms to follow the global “best practices” of responsible gambling.
This current study has three limitations. First, it is confined to one particular controversial industry within a single jurisdiction. Further research could draw on primary data from multiple jurisdictions to compare and contrast the use of CSR by gambling firms in different cultural and institutional contexts. Second, the focus has been limited to traditional casinos, which are land-based. In recent years there has been a substantial growth in Internet gambling. Further research is needed, to examine how gambling firms may adopt CSR policies and practices that are suitable for this virtual business channel, and how government
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may regulate it. Third, this paper did not investigate the Macao gambling firms’ relationship 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
with a complementary industry, the junket operators. Therein may lie a different story, about money-laundering.
Declaration This study was approved by the appropriate research ethics committee and has been performed in accordance with the ethical standards laid down in the 1964 Declaration of Helsinki. All persons gave their informed consent prior to their inclusion in the study.
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Table1. Interviewees, who were internal stakeholders.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Company A (Western)
B (Western)
C (Western)
D (Western)
E (Chinese)
F. (Chinese)
Code A1 † A2 † A3 A4 A5 B1 B2 * B3 B4 B5 C1 C2 C3 C4 D1 D2 D3 D4 D5 D6 E1 E2 E3 E4 * E5 * F1 F2 F3 F4 * F5
Job Title Director, Communications Director, Human Resources President, Education Dept. Clerk, Account Receivable, Accounting Dept. Officer, Security Dept. Casino Accountant, Casino Finance Supervisor, VIP room Officer, Public and Communication Dept. Coordinator, Convention & Exhibition, Sales Dept. Telephone Marketer, Casino Marketing Chief Executive Officer Vice President, Human Resource Dept. Marketing Executive, International Marketing, Casino Coordinator, Promotion & Events, Casino Marketing, Business Dept. Executive Vice President, Chief HR/ CSR Officer Senior Manager, Casino Promotions and Events Manager, Finance Planning Analyst, Finance Dept. Supervisor, Public Administration Technical Analyst, Information Technology Dept. Cleaner Assistant Director, Employee Training Dept. Director, Casino Operations Supervisor, Employee Relations, Human Resource Dept. Inspector, Table Gaming Supervisor, Table Gaming Director, Security Department Assistant Manager, Public Relations Dept. Assistant Manager, Public Administration Assistant Operation Manager, Table Gaming. Supervisor, Account Receivable, Finance Dept.
Medium Cantonese Cantonese English Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese English Cantonese Cantonese Cantonese English Cantonese English Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese
Notes * Frontline employees who worked in casino table gaming. † Two directors were interviewed together as arranged by Company A’s Human Resource Department.
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Table 2. Interviewees, who were external stakeholders
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Type of Organization Government Department
Code
Job Title
Official 1 Official 2
Director, Gaming Regulatory Authority Inspector, Gaming Regulatory Authority Supervisor, Problem Gambling Prevention and Treatment Centre Director, Institute for the Study of Commercial Gaming and Associate Professor, Gambling Studies Associate Professor, Business Economics Associate Professor, School of Public Administration/ Social Work Programme Associate Professor, Department of Communication Supervisor, Problem Gambling Counselling Centre A Assistant Unit In-Charge, Problem Gambling Counselling Centre B Director, Problem Gambling Counselling Centre C Executive, Problem Gambling Counselling Centre D Hotel Technician, Casino A Dealer, Table Gaming, Casino B Officer, Security Department, Casino C Reporter, Bilingual Newspaper A Director, Bilingual Newspaper A Assistant Chief Editor, (Local) Newspaper B Executive, Newspaper C
Official 3 Academic Institution
Academic 1 Academic 2 Academic 3
Problem Gambling Counselling Centre) Individual Gambler* Journalism
Labour Union
Academic 4 Counsellor 1 Counsellor 2 Counsellor 3 Counsellor 4 Gambler 1 Gambler 2 Gambler 3 Journalist 1 Journalist 2 Journalist 3 Journalist 4 Labour Unionist 1
Director, Macao Gaming Industry Labourers Association
Language Medium Cantonese Cantonese Cantonese Cantonese English Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese Cantonese English Cantonese English Cantonese
55
Table 3. Stakeholders’ Expectations and Returns for Meeting Them
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Stakeholders Macao Government PRC Government
Stakeholders’ Expectations Economic Non-Economic Tax revenue, Acceptable levels of economic philanthropy and acceptable development measures to reduce adverse externalities None Law and order
Overseas HQs
Profit
Macao Public
Funding of public services and benefits through the Macao government Career prospects (High salaries, training & development)
Employees
Acceptable levels of CSR compliance and philanthropy Acceptable levels of social welfare and philanthropy Employee welfare (Decent working conditions, facilities and recreational activities)
Returns for Meeting Stakeholder Expectations Favourable policies on imported labour and land; renewal of gambling licenses Continued supply of customers from the Mainland “Internal licence” from headquarters Acceptability, trust and support from the public – a “social licence” Attraction and retention of employees
56
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
Legitimacy gap: image of core business as involving risks and losses for customers
The need to close legitimacy gaps visa-vis various stakeholder groups
Legitimacy gap: the phenomenon of “problem gambling”
The need to secure the continued adoption of favourable policies by the Macao and PRC governments The need to comply with the HQs’ CSR policy requirements
The need to secure the continuation of the social licence from the Macao public The need to attract and retain employees
Highlighting areas where stakeholders’ pragmatic and moral expectations are being met
Manipulating cognitive symbols to cast gambling as a mainstream industry offering both pleasure and protection
CSR as a source of legitimacy for economic operations
CSR oriented to serving business interests and subordinate to them
Figure 1. Underlying Rationale for CSR by the Gambling Firms.
57
Appendix 1. Semi-structured interview guide for internal stakeholders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Personal details How would you describe your role in the organisation? How long have you been in this position? What background and experience do you bring to this position? Could you provide some background information about your department? When and why did your company establish a CSR department, if there is one?
Set 1 – Questions for those recognising the term ‘Corporate Social Responsibility’ 1. What do you understand by the term ‘Corporate Social Responsibility’ (CSR)? 2. What do you think about CSR as an issue in your company? 3. Why does your company engage in CSR? 4. Would you be willing to discuss your company’s experience of engaging in CSR? 5. Is there any specific issue to the gambling industry or special challenges?
Set 2 – Questions for those, who do not recognise the term, CSR 1. Tell me about your job and daily operations in your company. 2. What do you think about your company? 3. What does your company contribute to the society? 4. What responsibilities does your company have? 5. Can gambling companies be socially responsible?
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Appendix 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
2.
Semi-structured
interview
guide
for
external
stakeholders
Personal details How would you describe your role in the organisation? How long have you been in this position? What background and experience do you bring to this position? Could you provide some background information about your department?
Set 1 – Questions for those, who recognise the term, CSR 1. What do you understand by the term ‘Corporate Social Responsibility’ (CSR)? 2. How do you view CSR in the gambling industry? 3. In what ways do you think the gambling industry’s participation in CSR affects society? 4. Would you be willing to discuss the impact of the gambling industry, if any, on your organisation (problem gambling counsellors/ journalists/academics)? 5. Do you have any thoughts on whether the gambling industry faces any specific issues or special challenges?
Set 2 –Questions for those, who do not recognise the term, CSR 1. Tell me about your job and daily operations in your organisation. 2. How do you view the gambling industry? 3. What does the gambling industry contribute to the society? 4. What responsibilities does the gambling industry have? 5. Would you be willing to discuss the impact of the gambling industry, if any, on your organisation? 6. Can the gambling industry be socially responsible?
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