Developing institutional logics in the tourism industry through coopetition

Tourism Management 66 (2018) 244e262

Contents lists available at ScienceDirect

Tourism Management journal homepage: www.elsevier.com/locate/tourman

Developing institutional logics in the tourism industry through coopetition Veronica Hoi In Fong a, IpKin Anthony Wong b, *, Jacky Fok Loi Hong c a

School of Business, Macau University of Science and Technology, Av. Wai Long. Taipa, Block O, Room 950, Macau, China Faculty of International Tourism and Management, City University of Macau, Avenida Xian Xing Hai, Golden Dragon Centre, Room 519, Macau, China c Faculty of Business Administration, University of Macau, Avenida da Universidade, E22-1053, Taipa, Macau, China b

h i g h l i g h t s  Institutional environment co-evolve with organizational practices and behaviors in the tourism industry.  Organizational norms and values are affected through a dynamic interplay between institutional logics and coopetition.  A mutually beneficial relationship is developed through adopting an institutional logic of coopetition.  The conflicting-yet-complementary logics of cooperation and competition co-exist.  The evolution of a tourism destination is shaped across micro-, meso- and macro-levels.

a r t i c l e i n f o

a b s t r a c t

Article history: Received 6 September 2016 Received in revised form 2 December 2017 Accepted 4 December 2017

Drawing on the concept of institutional logics, this study advances the coopetition research on tourism destinations. An inductive multi-case study approach is adopted to explore the evolution of coopetitive practices of four tour operators in Macau over the last decade. The findings indicate that actors in a tourism destination respond to the changes of institutional factors by adopting an institutional logic of coopetition, which include five key processes: exploiting, exploring, bridging, sharing and boundary spanning. This paper contributes to the nascent literature on coopetition in tourism destination studies by analyzing the dynamics of co-evolution between the multi-stakeholders’ changing logics of practice and the surrounding institutional environment. The implications of institutional logics and coopetition from a managerial perspective are also discussed. © 2017 Elsevier Ltd. All rights reserved.

Keywords: Institutional logics Coopetition Institutional transition Co-evolution Multi-stakeholders

1. Introduction The tourism industry to date has prospered through standards and protocols that govern industry players in conducting businesses and engaging tourists through cooperation (Goeldner & Ritchie, 2003). These taken-for-granted rules serve as general principles that guide tourism operators to collaborate and jointly develop the industry into a better tourism system (Aas, Ladkin, & Fletcher, 2005). On the other hand, tour operators often compete to contemplate new ways to expand and excel at the expense of industry rivals (Porter, 1987; Slater & Narver, 1994). The presence of

* Corresponding author. E-mail addresses: [email protected] (V.H.I. Fong), [email protected] (I.A.–g.–> Wong), fbafl[email protected] (J.F.L. Hong). https://doi.org/10.1016/j.tourman.2017.12.005 0261-5177/© 2017 Elsevier Ltd. All rights reserved.

these two somehow contradictory views of collaboration versus competition among tour operators reveals a gap in the tourism literature in understanding how this paradoxical phenomenon has emerged and might co-exist (Corte & Aria, 2016; Wang & Krakover, 2008). This study aims to reconcile these contrasting views and to address the research gap by drawing on the institutional logics perspective (Thornton, Ocasio, & Lounsbury, 2012). The characteristics of the tourism sector are considered as a suitable context for conducting research on institutional logics for three reasons. First, the complex issues confronting the production and distribution of tourism products and services (Edgell, DelMastro Allen, Smitch, & Swanson, 2013) are contradictory in nature. Such issues include tightening up of tourism regulations and public policies as well as the emergence of new information technologies, financial organizations and organizations related to tourists themselves as consumers of travel. It is essential to

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

understand how these conflicting issues co-exist and affect the practices of tour operators and their underlying logics. Second, as the global tourism industry enters the twenty-first century on an upward trajectory, there are changes in the institutional environment that expose the actors to greater risks and increasing uncertainties. This climate of uncertainty provides considerable scope for the institutional logics to flourish (Dacin, Goodstein, & Scott, 2002; North, 1990). Third, prior research has shown that subject to different institutional pressures, the influence of an institutional environment on tourism organizations' behaviours varies significantly (Lavandoski, Silva, & Vargas-Sanchez, 2013). But the way that the creation and evolution of institutional logics affects an organization's survival in the tourism sector has yet to be developed. To address these gaps, a qualitative inquiry is conducted to explore how the institutional logics of coopetition have evolved in Macau's tourism industry (Della Corte & Aria, 2016; Smets, Morris, & Greenwood, 2012; Wang & Krakover, 2008). Over the last two decades, the status of the tourism sector in Macau has been elevated from under-developed to being at the forefront of tourism development (UNESCO., 2016). This change happened largely because of the liberalization of the gaming industry and the entry of global gaming operators. Changes in regulations have not only stimulated the development of the local tourism industry, but also driven the development of novel practices between the tourism organizations that would enable them to pursue sustainability. All in all, the emergence of coopetition is reflected in the mundane daily practices by which organizational actors collaborate and ally with their strategic partners while competing at the same time. Drawing on the perspective of institutional logics (Thornton et al., 2012), this article attempts to contribute to the tourism literature in two ways. First, coopetition among tourism operators reveals the path of underlying patterns of cooperation and competition and the transformation of both. That is, the findings advanced the coopetition theory by casting new theoretical insights into addressing the conundrum between the triggers and the changing patterns of coopetition among tour operators. Second, institutional logics provide the theory to understand how actors in inter-organizations change their values, norms and behaviors among multi-stakeholders during a transitional period. After a brief overview, the theoretical background and the research context are outlined in the next section, followed by the methodology of embedded cases. The main findings that illustrate the practices guided by the institutional logics of coopetition in different tourism organizations throughout an institutional transition are presented. The theoretical and practical contributions and future research are discussed in the conclusion. 2. Theoretical development 2.1. Coopetition in tourism destinations Defined as “within inter-firm interdependence, both processes of value creation and value sharing take place, giving rise to a partially convergent interest (and goal) structure, where both competitive and cooperative issues are simultaneously present and strictly interconnected” (Dagnino, 2009, p. 29), coopetition is conceived as rational actions and reactions in a cooperative or noncooperative game (Brandenburger & Nalebuff, 1996). By interacting and cooperating with one another strategically, competitors are able to reach a win-win situation, in which payoffs are affected directly by individual actions (Shy, 1995). This perspective gives rise to both the resource-based view (Bonel & Rocco, 2007) and network-based view (Gnyawali & He, 2006; Madhavan, Gnyawali, & He, 2004) by furthering the arguments that competitive organizations can seek resources and capabilities from partners for

245

achieving interdependence and complementarity, and can enrich their composition of members and their related dyadic relationships with a focal firm's position. Prior studies have illustrated the significance of coopetition in global, regional and national tourism settings (Mariani, Buhalis, Longhi, & Vitouladiti, 2014). The idea that cooperation (Beritelli & Laesser, 2011; Cai, 2002) and competition (Patsouratis, Frangouli, & Anastasopoulos, 2005; Ritchie & Chouch, 2003) can co-exist has also aroused the attention of scholars in the tourism field (Czernek & Czakon, 2016). Researchers have thus adopted both network and resource-based perspectives to study coopetition to develop different typologies of discrete relationships, degrees of intensity and influences (Della Corte & Aria, 2016). From a resource-based perspective, coopetition studies on tourism destination have shown that tourism competitors develop cooperation in their marketing and management activities in the same destination while competing in some business activities in the same business context (Wang & Fesenmaier, 2007; Wang & Krakover, 2008). The main rationales for collaborating with competitors among tourism organizations, especially among small and medium sized tourism organizations (Gnyawali & He, 2006; Madhavan et al., 2004) are to achieve a sustainable competitive advantage by pooling their resources or capabilities (Bramwell & Lane, 2000; Caffyn, 2000), sharing tourism knowledge in the shared locations (Mariani et al., 2014), and jointly mobilizing actions and resources toward the accomplishment of common ends €ngsjo €, 2003). These strategies can address the problems of (Gra limited product lines, poor human resources and insufficient cash reserves (Vernon, Essex, & Curry, 2005). From the network perspective, the main argument is to form a coopetitive network of tourism organizations at both the horizontal (coopetition relationship between travel agencies) (Huang, 2006) and vertical (coopetition relationship between hotels and travel agencies) levels (Guo, Zheng, Ling, & Yang, 2014). For exploring the coopetitive dynamics of the network in these destinations, issues of governance (Volgger & Pechlaner, 2014), integration of different destinations (Scott, Cooper, & Baggio, 2008) and trust building between firms in the same network (Czernek & Czakon, 2016) are examined. Subsequent to their changing relationships from dyads to networks, firms compete and cooperate for better value generation between stakeholders in different tourism destinations (Novelli, Schmitz, & Spencer, 2006). The formation of such coopetitive networks in these destinations provides some positive empirical evidence of organizations engaging in coopetition (Bhat & Milne, 2008; Marcoz, Mauri, Maggioni, & Cantù, 2016) and highlights the value creation generated from the composition and interconnectedness of various tourism actors, including the competitors, suppliers, customers and complementors in supply chains and networks. This can enable organizations to simultaneously share the risks while lowering the costs of production (Cabiddu, Lui, & Piccoli, 2013; Lemmetyinen & Go, 2009; Novelli et al., 2006). In particular, the diverse actors underlying the tourism destinations signify the benefits of cooperation and competition (Lado, Boyd, & Hanlon, 1997) since the cooperation among some competing organizations may enhance the travel experience of €ngsjo €, 2003; Stamboulis & Skayannis, 2003). tourists (Gra One important argument underlying tourism research is that a firm's individual strategies and performance are closely connected to the components of the destination. The success of a destination is usually characterized by the distinctive nature of tourism stakeholders, encompassing suppliers, distributors, customers, focal tourism competitors and other institutions (both private and public) (Saxena, 2005). While engaging in coopetition, these autonomous stakeholders in a particular destination have to develop shared rules, norms and structures to act towards a common end of

246

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

the same destination, since the changes are driven by the individual actors and influenced by their underlying logics and philosophies (Wang, 2008). A brief review of coopetition in tourism research reveals some gaps in the current literature. While most of the research on tourism destinations focuses on the formation of networks and unique resource contributions from different constituents for coopetition, these studies fail to capture the changes in institutional contexts and the impact on coopetitive dynamics in a co-located destination (Mariani & Kyl€ anen, 2014). Moreover, the complexity of multi-stakeholder engagements and the interdependencies of their diverse activities (Carlisle, Johansen, & Kunc, 2016; Carlisle, Kunc, Jones, & Tiffin, 2013), as well as the influence of the changing institutional environment, are yet to be discovered (Wang & Fesenmaier, 2007). In view of the above limitations, this paper adopts the institutional logics perspective to offer a behavioral explanation for the coopetitive practices of tourism actors by uncovering their changing norms and values.

2.2. Institutional logics Institutional logics are shared patterns of cognition at the individual and societal levels guiding their behavioral rules and collective practices (Friedland & Alford, 1991). Embedded in multiple institutional environments and constituents with diverse beliefs, values and expectations (Kraatz & Block, 2008; Thornton & Ocasio, 2008; Townley, 1997), organizations are likely to encounter contradicting institutional logics, thus posing significant challenges to maintaining prevalent institutional orders (Greenwood, Díaz, Li, & € m & Hagberg-Andersson, 2012). Lorente, 2010; Tidstro The adoption of institutional logics opens up two avenues for studying coopetition in the context of the tourism industry. First, prior studies acknowledge the effects of individual perceptions on the development of tourism organizations under a fast-changing n-Herrera, institutional environment (García-Cabrera & Dura 2014; Ottenbacher & Harrington, 2009; Roxas & Chadee, 2013; Wang & Ap, 2013). However, it remains unclear how the actors’ logics of practice can co-evolve with the changing institutional environment for coopetition (Della Corte & Aria, 2016; Wang & Krakover, 2008). Second, driven by multiple institutional forces in the corresponding institutional environment (Ford, Gadde, Håkansson, Snehota, & Waluszewski, 2011), actors may develop different logics and shape the organizational responses differently (Fyall & Garrod, 2004; Wang & Fesenmaier, 2007) for the purposes of rent seeking (Rumelt, 1987) or resource sharing (Fyall & Garrod, 2004; Wang & Fesenmaier, 2007). The prime motivations of tourism organizations behind the logics of competition or cooperation vary substantially, depending on economic, strategic, social and legal objectives imposed by the institutional environment (Bramwell & Rawding, 1994). The emergence of these forces might foster the development of linkages and boundary spanning among different stakeholders (Bleeke & Ernst, 1993; Pearce, 1989) to cope with economic and technological changes (Crotts & Wilson, 1995; Wahab & Cooper, 2001), such as tourism firms, trade associations and networks for tourism destination development (Carlisle et al., 2013). Nevertheless, the dynamic interactions among multistakeholders for developing the institutional logic of coopetition in different tourism organizations are yet to be discovered. For the research gaps discussed above, we have identified the following research question: How did the conflictingeyetecomplementary logics of cooperation and competition emerge among various actors in the tourism industry as a consequence of changes in the institutional environment?

3. Methods The objective of this study is to enrich coopetition theory by examining the development of institutional logics within the tourism industry. Consistent with earlier research on the topic of coopetition (Della Corte & Aria, 2016; Wang & Krakover, 2008) and institutional logics (Lok, 2010; Reay & Hinings, 2009), qualitative methods were used. A qualitative approach was appropriate in this setting because both coopetition and institutional logics in the tourism industry are poorly understood phenomena, institutional development is obscure, and event sequences and the causal dynamics for the relationships between coopetition and institutional change are opaque. This research presents an inductive case study (Eisenhardt, 1989; Pratt, 2009) with four tourism operators for developing a historical account of their institutional logics through the identification of categories and themes flowing from a rich set of interview data (Giddens, 1984). A multiple-case design is considered appropriate for this study since the focus is theory construction and elaboration (Eisenhardt & Graebner, 2007; Pettigrew, 1990). This narrative-based approach is particularly useful for articulating the key actors’ specific behaviors and their embedded logics while simultaneously cooperating and competing with different institutions in the tourism field, thus allowing the authors to describe the existence and influence of various institutions at multiple levels e individuals, groups, organizations and industry (Barley & Tolbert, 1997) in the existing phenomenon (Siggelkow, 2007). The resulting theory is often parsimonious and also more robust and generalizable (Edmondson & Ecmanus, 2007). 3.1. Research setting The choice of the tourism industry in Macau as an empirical context for this study was considered to be suitable since significant changes have occurred in the broader institutional environment over the past two decades (Siu, 2015; Wong & Siu, 2015) that forced the incumbent firms to change their mindset from competition to coopetition. Although Macau is globally renowned for its casinos and an abundance of gambling activities, the city has rich cultural elements where East meets West (Wong, McKercher, & Li, 2016). A glance at the city's tangible and intangible mix of Portuguese colonial and Chinese heritages could help explain why this postcolonial destination welcomes tourists in the millions (Ong & Du Cros, 2012). With a constellation of cultural heritage, architectural wonders and endless entertainment indulgences, the city has blossomed into one of the world's most visited destinations. However, Macau was also known as a fisherman's village prior to its casino gambling liberalization in 2002. This heritage suggested a harmonious relationship among companies in the city, with competition a rarity. The city's tourism industry had been dominated by a large casino tycoon who had monopolistic rights to operate in the casino and transportation sectors. Small companies worked independently with virtually no collaboration among them. The scourge of the monopolistic tourism system would have been diminished if the casino monopoly had worked in tandem with the local government's agenda to deliver superior value for tourists rather than being mesmerized by short-term profits (Wong & Siu, 2015). However, as an unfortunate result of the constrained institutional environment in Macau, tourism development stagnated with a gradual decline in tourist arrivals in the late 1990s and early 2000s. Macau's tourism development took a complete turnaround after the liberalization of the casino gambling industry in 2002. This strategic move had a cascading effect beyond the gambling industry; it facilitated the rapid growth not only of the tourism industry of the city, but also casino tourism worldwide, as other

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

locales have tried to mimic the recipe for success of Macau. A new institutional logic in the tourism industry has emerged in that the city welcomed the fierce competition among casino operators who brought their business models and expertise from the US, Australia, and Hong Kong (Wong & Siu, 2015). The fierce competition also trickled down to other tour operators as new entrants from around the world scissoring a slice of the tourism market with mega resorts and Michelin restaurants became prevalent in the city. Multinational enterprises such as Sands, Crown, MGM, Marriott, Starwood, Intercontinental, and more have invested in Macau to compete for middle-class Chinese clientele. In addition to the extant practice of competition, tour operators are also finding extra avenues to cooperate in order to cope with resource constraints and regulations. This dyadic view of change in institutional logics has taken place rapidly; within a 20-year time frame. It thus offers an excellent means to examine the theoretical underpinnings, which unfold in the findings below, in such a unique destination. 3.2. Sampling A multiple case study with four tour operators was conducted. The participants were briefed on the research objectives and their participation was voluntary. The sampling of four cases from the chosen population relied on theoretical sampling rather than statistical reasons. First, Dragon and Phoenix were selected mainly for their historical background. In the 1990s, there were only a few tour operators that focused on providing tour packages to the Mainland Chinese visitors. The two firms were the major tour operators in the early stage of tourism development. Most importantly, these two firms had a long presence in the industry and had encountered the institutional change of tourism throughout the previous two decades. Soon after the Macau government liberalized the gaming industry in 2002 and announced that both gaming and tourism industries were the primary economic pillars, many multinational companies started to invest and looked for new opportunities in Macau. This change also triggered the investment of some other travel agencies. Until late 2010, including both early- and lateentrants, there were less than 12 tour operators that provided a series of tour packages to the Mainland Chinese visitors. In between, Tiger and Lion were the late-entrants among them. With similar industry background, the selection of the later two enabled the authors to compare how different institutional logics were developed in both early- and late-entry firms while coopeting in the tourism industry. This allowed the authors to replicate the development of institutional logics, and the process of coopetition emerged in the previous cases and extended the developed theory. In order to ensure the anonymity and confidentiality of participants, the use of pseudonyms for the companies and the participants were employed. The four tour operators have been renamed as: 1) Dragon Travel, 2) Phoenix Travel, 3) Tiger Travel and 4) Lion Travel. The first two firms (Dragon and Phoenix) were the early entrants, whereas the other two (Tiger and Lion) were late entrants since they only began their operations in the late 2000s. Each of them had more than 200 employees, covering different functional duties for group travels, such as: designing and developing different types of tours; determining itineraries and arranging tour escorts; assisting the overseas tour operating partners in developing various of brochure content and marketing programmes about Macau; arranging accommodation, rental cars, and special events; and providing food and beverages, transportation, shopping information, and different types of entertainment. The former two firms developed their own four-star hotels, restaurants, jewellery shops and souvenir shops, while the other two firms were smaller in business size and did not own those amenities in the very beginning. Except owning a four-star hotel, the late entrants

247

were able to expand their business sectors like the former two throughout their operations (see Table 1). These tour operators had successfully developed their operational networks with other wholesale travel agencies in China, Hong Kong and Taiwan, which were the upstream suppliers. The upstream suppliers specialized in organizing collective tourism trips and then selling them to the four firms in Macau, which in turn, sold on to the travelers. These collective touristic trips were organized by global agencies for groups of persons, by means of adherence to plans and prices that had been set in the tourist contract. 3.3. Data collection Data were primarily collected through semi-structured interviews to accomplish a certain degree of comparability while ensuring an unobstructed flow of narration (Daiute & Lightfoot, 2004). A total of 188 interviews were conducted by one of the authors in two languages (Cantonese and Mandarin) between February 2002 and the end of 2015. The fact that the interviews spanned a long time interval allowed the researchers to witness series of firsthand events that underpinned the development of coopetitive logics after liberalization. Among those interviews, 75 were conducted on a face-to-face basis and the rest were carried out through phone or on-line video conferences. There were 20 interviewees from the corporate level, involving CEOs, general managers, senior managers, technical directors and consultants. Other respondents included sales personnel, tour guides, bus drivers, managers and supervisors covering each business sector. In addition, three respondents from other related institutions were also consulted; they were the officer and supervisor from the Macau Government Tourism Office and the programme designer from the Institute for Tourism Studies (Table 2). The interview protocols were developed iteratively among the three authors and then sent to the respective participants before each interview. The interview questions, most of which were “how” and “why” questions, were structured accordingly from broad to specific issues, covering multilevel effects and pinpointing the sequence of changes. The results of early interviews were used for refining questions and protocols for the subsequent interviews (Eisenhardt & Graebner, 2007). The major rationale was to gain personal insight and feedback from all related participants directly involved with the process of coopetition. The final interview protocols for the industry participants and other informants are included in Appendix A and B respectively. All interviews were tape-recorded, immediately reviewed and filed within 48 h. These interviews lasted between 60 and 120 min and were subsequently translated and transcribed verbatim directly into English. With these interviews as a primary data source, the authors gathered both present and historical accounts and episodes (Eisenhardt & Graebner, 2007) related to both processes of cooperation and competition and the prominent impact created by the institutional logics on the firms. Moreover, one of the researchers also observed the employees’ behaviors and actions when they were working, attending training sessions, meetings and company gatherings. Field notes and memos were made about different incidents. Extensive public sources of secondary data were also consulted, including publications, magazines, newspapers, related industry activities and historical accounts in order to triangulate the interview-based data. Subsequently, the phenomena of interest concerning the institutional logics and coopetition could be captured and well documented over time (Pettigrew, 1990). Both primary and secondary data were collected in a sequential manner until the state of data saturation was reached (Strauss & Corbin, 2008).

248

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Table 1 Background information of the companies.

Year of establishment Businessscope

Geographical location Ownership structure Number of employees Origin of visitors

Dragon

Phoenix

Tiger

Lion

1998 1 tour agency 3 souvenir shops 3 jewellery shops 1bus team 1 hotel Macau Wholly-owned >280 China and Hong Kong

1997 1 tour agency 2 souvenir shops 2 jewellery shops 1bus team 1 hotel Macau Wholly-owned >300 China and Hong Kong

2007 1 tour agency 3 souvenir shops 1 jewellery shop 1bus team

2008 1 tour agency 1 souvenir shop 1 jewellery shop 1bus team

Macau and China Wholly-owned >210 China and Hong Kong

Macau Joint venture >200 China, Hong Kong and Taiwan

Table 2 Number of interviewees and interviews. Dragon

Corporate Level CEOs General Managers Senior Managers Technical Directors Senior Executives Consultants Divisional level Managers Executives Supervisors Accountant Sales Tour Guides Bus Drivers Total

Phoenix

Lion

Tiger

No. of Interviewees

No. of interviews

No. of Interviewees

No. of interviews

No. of Interviewees

No. of interviews

No. of Interviewees

No. of interviews

1 1 1 1

2 4 3 3

1 1 1 1

2 3 3 3

ee 1 1 1

ee 2 3 2

ee 1 2 1

ee 2 5 3

ee 2

ee 5

1 1

2 2

ee 1

ee 3

ee ee

ee ee

4 1 1 ee 4 8 2 26

7 2 2 ee 6 14 2 50

4 1 2 1 4 8 2 28

8 2 4 1 4 12 3 49

2 2 2 ee 4 9 2 25

4 4 2 ee 5 13 4 42

2 2 2 ee 5 7 2 24

3 4 3 ee 6 11 3 40

Government Institutions

Department

Position

No. of interviewees

No. of interviews

Macau Tourism Department

Licensing Division

Institute for Tourism Studies Total

Executive Development Programme

Officer Supervisor Tutor

1 1 1 3

3 2 2 7

3.4. Data analysis The data analysis consisted of three stages. In the first stage, the authors drew on both the accounts from the interviewees and the secondary data concerning the patterns and practices of the four firms before and after the liberalization of the gaming industry, in order to build an “event history database” (Garud & Rappa, 1994). This reconstructed narrative of competition and cooperation allowed the researchers to develop a detailed understanding of the firms’ responses and their changing practices under institutional evolutions. The changes in the firms were identified in a balanced way so that the voices of different organizational members, including members from corporate level, business level and functional level of the four firms, and related institutional members could be heard. This provided the means for the authors to compare and contrast the case descriptions of participants from different perspectives. In addition, the authors also classified the important events that gave rise to responses, and the changes after liberalization, as well as their impact on the firms. Some of the critical events that caused the changes of the practices or actions were summarized by the participants in the interviews, and these were subsequently cross-checked with other secondary sources and the interviewees. In the beginning stage, the primary focus was on the original firm practices or actions undertaken before the change. The

later stage focused on events that reflect the institutionalization of new norms, beliefs and practices in coopetition (critical events have been shown chronologically in Table 4). This allowed the authors to uncover the causal relationship among different chronological events at different levels of analysis. The second stage involved re-examining the data to identify initial concepts and grouping them into first-order categories through a process of open coding. Upon completion of each interview, the record was transcribed into a text format. The data were then imported into the qualitative data analysis tool NVivo 8. The interview transcripts were analyzed line-by-line in order to break the data down into discrete parts (words, sentences and paragraphs). In addition to the interviews, other secondary data sources were also imported into NVivo. Working across all sorts of firsthand and secondary data (interviews, observations, internal documents, magazines, office documents, etc.), similarities and differences were listed. This was an inductive process, building on different data and the event history database and emphasizing the activities through which the two logics (competition and cooperation) emerged. Table 3 provides illustrative quotes on the major themes that emerged from analysis of the two logics. In the third stage, the first two authors compared and analyzed the development and evolution of institutional logics with reference to the related actions and activities of the four operators. Both

Table 3 Coopetitive practices: Illustrative data. Themes and practices Cutting cost Hired part-time staff and imported Mainland Chinese labor Employees had to take job rotations

Offered lease buyback deals to employees

Utilizing different resources Offered salary above market price

Creating new tour packages Promoted more leisure and entertainment for the development of Macau's casino tourism

Sands became one of the important spots in the very beginning Wynn Resort, MGM Grand, Galaxy Resort and Venetian Resort became the most visited new spots for visitors Procuring tours from new upstream suppliers Approached new upstream suppliers in Mainland China

Offered higher tour budget to the upstream suppliers in Mainland China

Expanding formal institutional partners Formed partnerships with tour operators to pursue joint activities

Formed close business relationship with the government sectors

Building informal institutional partners Established interpersonal relationships with employees in other tour operators

“It's impossible to hire local residents to fill all available positions; it's prohibitively expensive. We are forced to employ imported labour because we are in competition with the casinos for human resources.” (General Manager, Lion) “It is much cheaper to hire part time or Mainland Chinese labourers because of Macau's existing human resources deficiency.” (Manager of Souvenir Shop, Tiger) “You can't imagine how different industries compete for human resources. In order to cut costs, our employees must be able to perform multiple roles; a single employee must simultaneously act as a salesperson, receptionist and an administrative clerk across different departments.” (Sales 2 of Jewellery Shop, Phoenix) “I think job rotation becomes a common practise due to the rising cost and insufficient labour supply in Macau's competitive environment.” (Sales 1 of Souvenir Shop, Dragon) “We face capital constraints. If we had an unlimited budget, we would not rent the buses from our employees. However, our competitors have similar business practices.” (Senior Manager, Tiger) “If Dragon doesn't rent from me, I can rent it to others because it is a highly competitive market. The prices paid for the rentals are fair, though.” (General Manager, Phoenix) “We face ups and downs in this industry. We have no choice but to offer pay that is higher than the market price to attract professionals.” (Consultant 1, Dragon) “There are no other solutions than to offer a much higher payment that is above the market value.” (General Manager, Lion) “So called “zero-fee tours” in Macau is a common practice for all tour operators to follow … Although it doesn't make sense to pay them [Mainland Chinese tour operators], we have no control in such a hyper-competitive market.” (Tour Guide 1 of Tour Agency, Phoenix) “It's really crazy that we have such a practice [“negative-reception-fee” tours], but who cares? [Tour Operators] are all in this pool together.” (Tour Guide 9 of Tour Agency, Dragon) “We are the first firm to launch a series of tour packages to visitors. However, this package was immediately imitated by others. We have to keep thinking of new innovations for what we can provide next.” (Executive of Tour Agency, Dragon) “Tourism services or products are socially constructed, meaning that services and products are constantly evolving based on tourist interactions at one place and time. It drives the competitors [other tour operators] here to innovate more and leads to a variety of entertainments and leisure activities in casino tourism.” (Consultant 2, Dragon) “Aside from the Hotel Lisboa [the oldest casino], the Sands Casino was the first hot new landmark [casino] in Macau. Many of our visitors require a visit to this spot in the tour package.” (Tour Guide 5 of Tour Agency, Dragon) “All visitors had requested to go [to the Sands Casino] at that time because there weren't many new things to explore.” (Tour Guide 3 of Tour Agency, Phoenix) “The completion of the Cotai projects marked a new era in Macau. Tour operators design packages to include new spots; some of the tour operators even provide tailor-made tour packages to their visitors …” (Senior Executive, Phoenix) “We are looking for new sights now. You can see lots of tour buses parked outside those resorts and casinos. They are our new selling points now.” (Supervisor, Tiger) “The changing competitive environment has forced us to explore the market in China. It means that we need to visit more mainland agencies in different provinces.” (Senior Manager, Dragon) “It is not an easy thing to do without connections in China. The network is so complex. Our GM has proposed increasing the number of new tour agencies in Mainland China. Fortunately, they can provide us with more tour groups in return.” (Supervisor of Tour Agency, Lion) “It is not a joke; we face cut-throat competition. Our profit margins are so slim already. We have to pay Mainland tour agencies Mop$500 for each visitor in our tour groups. We charge a tour fare that is lower than the tour cost.” (Senior Executive, Phoenix) “There is no fair market price in between and nothing is guaranteed. We don't have stable partners in China. Our collaboration depends on how much we can offer them. Frankly, they only sell tours to the companies who can offer a higher payment for each visitor. This is the accepted business relationship between the local and mainland tour agencies.” (Senior Manager 2, Lion)

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Offered “zero-fee tours” and “negative-receptionfee” tours

Representative quotes underlying major practices

“Phoenix was one member of an oligopoly during the previous decade. Times have changed and nothing is impossible. Now, they urge us to collaborate with them. Why? Simply because of hyper-competition.” (Consultant, Tiger) “How should I explain this … I believe that the phenomenal growth of the tourism market in Macau relies heavily on the growing symbiosis between different tour operators. Their new strategic focus on joint collaboration and activities fit the current market and business environment well.” (Technical Director, Phoniex) “We try to establish close business relationships with different government departments now. This is how to endure in the industry …” (Technical Director, Dragon) “A formal relationship between us [tour operators and government departments] is needed. In a certain sense, this type of “guanxi” may help us to solve many problems in our field. We need to collaborate with them ethe closer the better.” (General Manager, Lion) “Employees in other tour operators have become our friends. It is so weird that we don't consider them competitors, but instead see them as friends. This kind of informal relationship is mutually beneficial when we engage in our own tourism activities.” (Tour Guide 5 of Tour Agency, Phoenix) 249

(continued on next page)

Themes and practices

250

Table 3 (continued ) Representative quotes underlying major practices “How big is Macau? People know one another very well, especially in our industry! … It is better to establish a close, personal relationship with them (employees of other tour operators) since it is difficult to classify our relative positions already.” (Sales 2 of Souvenir Shop, Lion) Sharing information collectively Enhanced communication with employees in other tour operators through new media

Exchanging resources Shared tour buses and drivers

Jointly promoted and sold tour products and services

Enforcing rules Abandoned the practice of“zero-fee-tours”

Chose to collaborate with the licensed travel agencies and tour guides

Monitoring norms Established a tourism organization to govern intraindustry discipline

Participated in promotional and marketing activities which were organized by the tourism institutions

“Other tour operators can rent from us daily, depending on whether or not it is peak season and the availability of buses. Normally, others have to pay us Mop$1800 to Mop$2000 which includes both driver and car rental.” (Senior Manager, Tiger) “I work for this tour agency today, but another agency the next day …” (Bus Driver 2 of Bus Team, Lion) “[Tour operators] share different services and products with each other. This explains why we are so successful. For example, we jointly promote the same restaurants. Sometimes, we buy lunch tickets from employees of Lion and sometimes, they buy from us if they are in need. So, we can sell all the tickets before they expire. Simply, this can lower the possibility of monthly sunk cost accumulated.” (Consultant 1, Dragon) “It is impossible for each tour operator to maintain various tour facilities, products and services solely for their own customers' satisfaction. The investment would be huge if this were the case. So, we need to work with other tour operators in areas that are outside of our specialty. In return, we will give them either a commission or a portion of the profit.” (CEO, Phoenix) “Our daily practise is to bring our tour groups to souvenir shops. Our customers will buy from them and we are paid later by commission. I think this benefits both tour operators and souvenir shops.” (Tour Guide 3 of Tour Agency, Lion) “The regulatory framework requires tour operators to reject “zero-fee-tours”. We ensure that the content of the contract signed between mainland tour operators and mainland travellers also meets our requirements. We are happy to support this because it creates healthy growth in the tourism industry.” (Technical Director, Dragon) On August 9, 2010, the CNTA required all tourism authorities in Mainland China to increase oversight and regulation of outbound tours to Macau. At the same time, the Macau Government Tourist Office required the local tour operators to follow the same regulations. This prevents tour operators from attracting visitors by offering a tour fare that is lower than the cost. Consequently, the majority of our businesses comply with this law. (CEO, Dragon) “We carefully choose our partners now because the institution has changed. Laws have been changed, norms have been changed, everything has been changed … If you are the player, you need to know the rules. This industry is a small community. It doesn't make sense to collaborate with those [tour operators]that ruin our reputation.” (General Manager, Tiger) “Profits are important. However, we have to be very careful when we collaborate with one another. I have noticed some tour operators employ tour guides with no legal license at all. I don't accept that.” (Consultant 1, Dragon) “A new tourism institution was formed not long ago. Although it is not a government institution, this particular organization functions unofficially to provide semi-official guidelines for behavior that are followed by most of the tour operators now. I would describe it as a tour operator union that governs the behavior of individual tour operators. As long as they are members, they can contribute their opinions and ideas.” (General Manager, Lion) “New norms, regulations and most tourism related activities are brought to the table at meetings. This is a good platform that provides everyone, including competitors or collaborators the most up-to-date information, so that we can all follow suit.” (Consultant, Phoenix) “We act as though we are community-based tourism. In fulfilling the norms, we cooperate with one another to sell a full package to tour groups. The situation is quite complicated, though. Very often, we jointly promote a particular type of tour product or service. For example let's say all of us [tour operators] promote a tour spot for sightseeing. Sooner or later, this location will become a hot spot for tour business. As tour operators, we will benefit in return. I think this is also the desire of the government.” (Senior Manager 1, Lion) “This is not only our responsibility. You see there are so many institutions currently involved. IFT, MGTO, the food and beverage industry, and the Travel Agency industry all work together to help promote tourism. So, our norms are developed by the whole society, including both public and private institutions.” (CEO, Dragon)

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Recommended tour products and service provided by other operators to their own customers

“Tourism has become knowledge-intensive and competitive. Our colleagues communicate with employees of other tour operators through different forms of social media. We assume that communication does not happen solely within individual firms, but through “spider's webs” linking tour operators. We communicate by means of different apps such as Facebook, WebChat, and WhatsApp, which enable geographically dispersed, but in-depth interactions.” (Technical Director, Tiger) “Employees who work for different tour operators can still become connected in the sense that they can interact with each other through different forms of social media. The usage of social media helps facilitate the effectiveness of communication and enhance job performance.” (Senior Executive, Phoenix)

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

authors separately interpreted and coded data to analyze ambiguous information. Then the two authors compared and contrasted all the initial code developed in the open coding process together. The first-order codes were further cross-checked by the third author separately. Finally the three authors jointly interpreted each second-order codes. By going back and forth between the raw data and existing theoretical concepts, ten first-order categories and 5 sorder themes emerged after condensing and aggregating the initial codes (Strauss & Corbin, 2008). This was an iterative process, which moved between emerging data patterns and the literature until the conceptual themes were defined (Eisenhardt, 1989). These categories and causal relationships formed the central conceptual model which captures the essence of this research e that is, the coopetition (competition and cooperation) of those coopeting firms. Fig. 1 depicts the data structure, representing the development of the model from first- and second-order themes. Yin (2009)'s assessment criteria to enhance the quality of the empirical materials and analysis is adopted in this paper. First, an extensive database about the four firms was developed through company leaflets, annual reports, journals, and internal documents. Specifically, the initial analysis of the data was exploratory in nature and intended to develop some initial insights about the evolution of logics pertinent to coopetition. Second, other secondary and objective data, such as government policies and regulations, and standards and agreements adopted by the corresponding institutions and industry associations, were used to trace the impacts from the evolution of the institutional logics in this industry, as well as the coopetitive dynamics of these four firms. The background information was longitudinal in nature, spanning the period 2002 to 2015. These data were collected through archival documentation, such as licensing, publications, theses, newspaper articles, public interviews, press announcements, industry reports and magazines. This approach enabled the researchers to highlight the multilevel nature of the institutional logics, detailing the impact of institutional development at the micro-, meso-, and macro-levels. In this way, interviews and observational data were triangulated with other secondary sources to enhance the trustworthiness of the interpretations. Third, the process of theoretical sampling followed the replication logic, thus ensuring external validity.

4. Findings Limited by Macau's small geographical area and the monopoly gaming license, Macau's economy lacked business opportunities before 2002. However, an innovative mindset and long-term vision had been developed by the Macao SAR government after the termination of its 40-year monopolization of the casino business at the end of 2001. In order to revitalize Macau's business environment, the Macao SAR government approved three casino licenses to attract international investors for shaping the city as a world-class casino tourism. The evolution of Macau tourism had shifted the orientating behaviors and practices into the new logic of tourism. In order to compare the changes, the study was divided into two stages, the pre-liberalization stage and the post-liberalization stage, before and after 2002. The new logic of coopetition, which incorporates five distinctive elements embedded with both competitive and cooperative dimensions (namely exploiting, exploring, bridging, sharing and boundary spanning) were adopted by the operators. In this way institutional logics that influence the way how tourism actors cooperate and compete have been identified.

251

4.1. Pre-liberalization stage 4.1.1. Exploiting Exploiting entails competitive activities or practices undertaken in the pursuit of existing tourism reach, expansion and profit. It occurs in multiple tourism products and services. Firms may compete for input (human resources, indigenous supply, favorable government treatment, information and other resources) and output (contracts, profit and market share). In this case, exploiting presents a competitive perspective which captures two dimensions e cutting cost and utilizing different resources. They were both practiced before and after 2002, the transitional point of the tourism industry. 4.1.1.1. Cutting cost. The capital investment of tour operators in the tourism industry was large. Even though the firms classified themselves as small to medium size companies, each had employed more than 200 staff. In order to increase their competitiveness, Dragon and Phoenix which started their four star hotels in the late 90s constructed two four star hotels to provide comprehensive modern hospitality services including luxury hotel rooms, restaurants and simple forms of entertainment, such as night shows and night clubs. These services were integrated into a single property for both tourists and local residents. In addition to investing in hotels, the two firms also owned several jewellery shops and souvenir shops for providing visitors an integrated shopping experience. In order to lower the operational cost, they had to look for more part-time staff; fewer employees had been employed for the same function, and they frequently hired imported Mainland Chinese labor for a lower payment. Employees would be assigned to different functions to enhance job rotation. This could help Phoenix to decrease its cost. Some sales from the jewellery shop were shifted here (hotel) to work under our house keeping department. Sooner or later, they would be called back when there was not enough labor. (General Manager of the Hotel, Phoenix)

4.1.2. Exploring Exploring involves enriching a firm's current stock of resources or capital by searching, discovering and innovating for more information or resources related to the tour products or services. Exploration incorporates creating new tour packages and procuring tours from new upstream suppliers. This is a strategic action of competition that enables the firm to acquire more scarce tour resources needed for its economic and social development. 4.1.2.1. Creating new tour package. Before the announcement of the tourism industry as a primary industry in 2002, individual tour operators competed with each other by taking independent action for their own business performance. They had to realize both advantages and disadvantages in substantial transaction and control cost; and they had limited power and control mechanisms for monitoring and affecting the behavior of industry operators. Given the underdeveloped internal infrastructure and related tourism facilities, as well as the narrow scope of tourist demand in Macau, Dragon and Phoenix viewed themselves as independent tourism product and service providers in the business market. Because of the immature nature of tourism development in Macau, operational coordination among tour operators was minimal; most of the tour operators competed in promoting new tour packages to visitors. Before 2002, Hotel Lisboa was classified as a flagship of the

252

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Fig. 1. Theoretical categories of Coopetition.

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

city's casino industry as well as a landmark which was visited most by the visitors. The Ruins of St. Paul, Temple A Ma and several other landmarks also were often visited by a majority of international visitors. Restricted by its geographical setting, tour operators could hardly develop new tour destinations, and they competed in attempting to do so. 4.2. Post-liberalization stage 4.2.1. Exploiting 4.2.1.1. Cutting cost. The pressure on cutting costs was stronger after 2001, when more multinational enterprises entered and started operating in Macau's casino tourism. Tour operators had to lower their costs and fiercely competed against early- and lateentrants, especially those were more cost effective and faster in tourism product and service development. Except managerial level, most of the vacancies offered in the hotels, jewellery shops and souvenir shops were filled by the imported labor, largely from Mainland China. Comparatively, the firms employed three Mainland Chinese workers to one local Macau resident. The salary for mainland Chinese workers ranged from Mop$4000 to Mop$7000 while the payment for locals exceeded Mop$10,000. I think the logic is simple and it happens in any firm. No matter whether before or after 2001, from scant to strong competition, our strategy is to cut cost. With existing resources e financial, physical, human, organizational, or intangible e cost-cutting measures are used. In this stage, I found one thing; we need to drive down financial resources throughout all the stages. (CEO, Phoenix) The provision of touristic transportation was presumed to be conducted in the capacity of service intermediators. Normally, tour operators equipped with both medium size buses, ranging from 18 to 25 seats and large size buses, ranging from 33 to 51 seats. The cost of owning diversified tourist buses was extremely high, between Mop$800,000 per medium size to over Mop$1 million per large size tourist bus. Providing passionate and quality services to visitors between different destinations required a high demand for transportation services to cultural heritage sites, resorts, hotels, the airport and ferry terminal. Basically, the minimum requirement for a fleet of tourist buses exceeded 10 for each firm. As the demand for tourist buses kept increasing due to the robust growth of visitors in the last decade, the four firms had to invite their employees to purchase tourist buses for sharing the operating cost. In turn, their employees would have leased or rented them to the firms with negotiable prices. This strategy largely released the pressure of high operating cost for the four firms. We are invited to share their operational cost, employees may have the chance to purchase tour buses from the company in return to lease them back to our own firm. (Executive, Dragon) Surprisingly, cutting cost might not be considered as a constraint to disable the dynamics of the tour operations. Facing a fiercely changing tourism environment, on the other hand, forces on cutting cost demonstrated enabling dynamics to the four firms. The firms were motivated to work more dependently with each other, with the common goal of cutting cost in the later stage of environmental change. 4.2.1.2. Utilizing different resources. A critical success of these tour operators was found in a firm's competitiveness utilizing different

253

sorts of tourism resources. The speed of change in the competitive tourism landscape, coupled with increasing hyper-competition necessitated the firms' practices utilizing customers, human resources, and tourist bus licenses. Although the number of visitors had increased remarkably year by year after 2001 (from 6,948,535 visitors in 1988 to 30,714,628 visitors in 2015), the profitability of tour operators depended much on the purchasing power of the visitors. Most importantly, these firms relied on “zero-fee tours” or “zero-reception-fee” promotions in the previous decade, which meant that travelers from Mainland China did not need to pay any tour fee or they paid extra low tour fees. Then, Mainland Chinese tour operators farmed out such tours to the four operators in Macau without paying any reception fee. Due to a zero charge on reception, the operators would try their best to request or receive money for the provision of services. Even worse, due to hyper-competition in the tourism development, the four operators had to compete on “negative-reception-fee” tours. Practically, it meant that Mainland Chinese tour operators requested Macau tour operators to pay a reception charge in order to provide Macau tour operators a package tour. In this situation, the four firms had to compete for wealthy visitors who were willing to spend. What can we do? If we don't buy from them (Mainland Chinese tour operators), where can we get our source? All the tour operators compete for quality travelers (wealthy travelers). We spend Mop$300 to Mop$500 for a Mainland Chinese visitor, varying from their locations. (General Manager, Dragon) Apart from customers, the four firms also faced competition for employing professionals who would present themselves in an interesting and sincere manner in tourism. Macau had long been suffering from a human resources deficiency before and after 2001. The expansion in the demand for gaming labor had brought about an obvious disequilibrium in the local labor market. Macau's local population, which was not identical to the “resident population” as reported in official statistics, was less than half a million and of low education on average. Besides, since the opening of the first Las Vegas-style casino (the Sands Casino) in May 2004, and the rapid expansion of other world-brand resorts and casinos, the demand for gaming human resources increased considerably. In order to protect the local labor force, the government adopted restrictive labor immigration practices. The Statistical Information and Census Service (DSCE) reported the size of direct employment rate rose five times from 9000 in 2002 to over 45,000 in 2007. Nevertheless, thousands of vacancies were classified by the casinos as unfilled. The shortage of labor had long been felt in the local economy; unemployment was only 1.7% in the first quarter of 2014 and there was a restrictive labor force policy implemented after 2002. Owing to these facts, it was extremely difficult for the four firms to hire qualified staff; otherwise, they had to offer salary above market price. Consequently, it put high pressure on the firms to increase their operational cost. It is not simply an intra-industry competition but inter-industry competition on human resources. (Senior Manager, Lion)

4.2.2. Exploring 4.2.2.1. Creating new tour packages. Vying for developing new tour packages had been prolonged after 2002. As more and more new world casino operators proactively constructed comprehensive flagship properties, such as the Sands Casino in 2004, Wynn Resort in 2006, MGM Grand in 2007, Venetian (a mega-integrated casino

254

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

resort at Cotai Strip) in 2007 and Galaxy Resort in 2011. The development and integrated establishments of these mega resorts with unique designs and themes had provided ample options for leisure entertainment for visitors. They provided shows, events, restaurants, accommodations, shopping outlets and family activities to attract visitors. Thus, the provision of different unique offerings stimulated the four tour operators, including both earlyand late-entry firms to compete on innovating new tour packages. We compete on providing new tour packages for visitors before and after 2002. However, we focus more on promoting leisure and entertainment for the development of Macau's casino tourism now. (Tour guide 6 of Tour Agency, Dragon) Tourists seek novel entertainment, socialization, and escape and relaxation opportunities here. We need to explore more new sights and flavor for engendering a unique and memorable tourist experience that can hardly be imitated by our rivals. More importantly, we expect return customers. (General Manager, Phoenix)

4.2.2.2. Procuring tours from new upstream suppliers. The success of the four operators relied heavily on the numbers of tourist provided by the wholesale travel agencies in China, Hong Kong, Taiwan and elsewhere. The upstream suppliers located in other places formed a collection of connected firms that were engaged in value-added activities or tasks to the four firms. Business transactions between tour operators and their upstream suppliers were temporary and changed over time. First, the provision of visitors from the upstream suppliers was not stable. For example, tourists in different cities and provinces located in China would be grouped together in Shenzhen and then the wholesale travel agencies would sell these tour packages to the four firms. If some of the upstream suppliers could not gather enough visitors, they might not be able to provide sufficient tours for the operators in Macau. Subsequently, the tour operators would be forced to look for suppliers in other places. Second, the provision of sufficient and quality tours relied on the tour cost or tour budget offered by the four firms. In other words, a higher tour budget offered to the upstream suppliers ensured greater chance of procuring better inbound tours for the operators. The four operators did not have much bargaining power to negotiate with only a few suppliers. Thus increasing the quantity of new wholesale agencies enhanced the four firms’ market presence and share, since much of their profit depended on commissions gained from tourist expenditure. Consequently, the intensity of exploring new wholesales agencies in China, Hong Kong and Taiwan was high after the transition of the tourism industry. Hong Kong, Taiwan, and Mainland China all have wholesale agencies that supply tour groups into this network. We, then, are the “buyers” for the tourists; the individual agencies in the tourism industry compete with one another for tour groups. We work hard to look for new suppliers in order to enlarge our market share. (Senior Executive of Tour Agency, Phoenix) We shifted our focus away from Taiwanese tour groups around two years ago. After signing a joint venture with a new business partner in Zhu Hai (a city located in Guangdong province), we had sufficient financial resources to allow us to rely less on tourists from Taiwan. What's more, we were able to use our business partner's network of tourist agencies in various regions of China to build relationships with wholesale agencies in over 20 provinces. Consequently, we have been able to penetrate the Chinese market and become familiar with more suppliers in the tourism supply chain. (General Manager, Lion)

Most of the veteran tour operators in Macau had made fundamental changes in their business mindset and practice in respect to coping with the drastic changes in market conditions and regulatory policies. Macau's competitive environment drove the four operators to shift from pure competition in the early stage and step by step to increase their alliances after 2002. 4.2.3. Bridging Bridging refers to the acquisition of resources and capabilities through different means of institutional network building, which enables a tour operator to extend well beyond its business boundary. Bridging tends to focus on cooperative aspects of the relationship and it consists of two dimensions. They are expanding formal institutional partners and building informal institutional partners. The collaborative relationships of bridging both formal and informal institutional partners, focusing on developing business and personal relationships with local competitors and other formal institutions only existed in the Macau context after 2002. These actions were first adopted by Dragon, Lion and Tiger, and then followed by Phoenix latterly. 4.2.3.1. Expanding formal institutional partners. When the four operators expanded both locally and internationally through the establishment of international cooperative ventures, bridging institutional partners became fundamental to their success. The formal institutional partners consisted of different organizations in the tourism industry. Their objective in bridging close formal business ties with extended institutional partners was to assist the firms to access strategic resources, including different types of tourism market power, organizational resources, and marketing expertise in both local and foreign markets. Collaborating with the tourism authorities and other government institutions became increasingly important after 2002. These government agencies possessed legal authority to develop laws to regulate the activities of travel agencies and the exercise of the profession of tour guides. Laws and regulations on tourism were not so stringent in Macau before the liberalization of the gaming industry. Dragon and Phoenix agreed that forming a business relationship with the government institutions did not really affect their operation before 2002. However, this idea had been changed after new tourism policies were implemented in 2004. In order to promote the city as one of the most attractive travel destinations in Asia, any tour operators registered in Macau were licensed in accordance with the new laws and policies to exercise different tourism activities. So, forming a close business relationship with the government sectors ensured the continuity of their tourism activities, such as gathering information, exchanging knowledge and enhancing organizational learning in a specific tourism-related technology or type of information. Thus relationship-specific routines, such as informationbased rules and embedded cultures, became institutionalized between different local tourism actors. We rely heavily on different tourism institutions in Macau such as the Macao Tourism Office and the Institute for Tourism Studies. A formal relationship with these institutions ensures we have access to the most up-to-date tourism regulations and information. Prior to 2002, the tourism institutional system was not well established. After the liberalization, however, the system became legitimate. So, for safety's sake, we should maintain formal network ties with all sorts of tourism institutions. (General Manager, Phoenix) Apart from government institutions, operators also acknowledged the formation of an unique network with competitors might

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

increase the collaboration opportunities and provide a multitude of benefits to their business and the tourism industry. After 2002, Macau's tourism business was launched into a new era. Aside from more new entrants of tour operators, more global casino gaming operators were interested in investing in Macau. They helped develop and solidify Macau's position as a world-class tourism destination. Consequently, some tour operators believed that they could no longer rely on competition for long-term sustainability. So, they continued to compete on price, development of superior capabilities, and being the lead firm for the greatest number of tourists. On the other hand, Dragon, Tiger and Lion did form partnerships to pursue joint activities in return for a better profit. They collaborated to procure tourism products and services from one another's tourists on an ad hoc basis. Phoenix neglected the importance of building a strategic network with other rivals, but the recognition of a consecutive drop in profit forced the firm to accept that forming a strategic business network could be one of the competitive strategies to gain success. Prior to major changes in the economic landscape, our networks limited our business to wholesale agencies in other locations. However, increased competition has forced us to collaborate with competitors to ensure that we are able to jointly satisfy the needs of tourists. This has led to a shift in the position of travel agencies from that of single competitors to strategic cooperators. (CEO, Dragon) The rules of the game in the travel business have changed, causing us to be captured in the boundaries of the current tourism situation. When our competitors join together eagerly to try for larger market share, you can imagine what will happen if we don't follow suit. It doesn't make sense right? But this is the new reality; we must compete and yet at the same time collaborate with each other or risk being out of the game altogether. That's why we have formed a cooperative-competitive network that allows us to embrace the fast-paced development of tourism in Macau. (Consultant, Lion) I think something is wrong with their (corporate level) traditional mindset; it's impossible to operate in their old way. Macau has kept changing. While our rivals formed strategic networks to enhance organizational performance, we were working alone at that time. (Tour Guide 5 of Tour Agency, Phoenix)

4.2.3.2. Building informal institutional partners. Aside from a formal business network with different tour institutions in Macau, an individual's social capital was a key variable affecting the success of the operator in the industry. In the early stage of development, people in both Dragon and Phoenix did not form many informal relationships with outsiders. Relationships extended to the people in the government sectors and employees of their competitors. Social capital affected people's boundary-spanning activities and their associated interactions with both internal and external organizational members. In any given social position of a job nature in these firms, individuals needed to construct informal personal connections with the government institutions and their competitors. People bound by the same social nature of the tourism community could understand the nature of their own jobs in Macau's tourism industry, and the need for maintaining long-term contracts, obligations or mutual commitments. It was in these social and interpersonal relationships that potential network parties

255

looked for common practices, experiences, knowledge and understandings. These relationships helped establish their common social identities based on the nature of their jobs, for instance, tour guides, sales, technical directors and tour executives. They formed informal social networks for common ties which enabled individuals in these firms to claim dyadic relationships within the same tourism bases. Building informal social networks with all sorts of institutional parties, including government sectors and competitors would facilitate firms to share and discover common tourism events, and would benefit also mutual superiors, peers, subordinates and other acquaintances. It is essential to establish a web of social capital with other executives, tour guides, technical directors, transportation coordinators and salespeople beyond our operational working environment. In the past, we only bothered to maintain relationships with colleagues and employees within our own agency. As things have changed in recent years, however, employees in our agency work hard to build close ties with employees in other agencies at a variety of levels within those outside agencies' corporate hierarchies. I believe these dyadic relationships not only benefit an individual with regard to their position in their organization, but also the whole company in terms of marketplace resource exchanges. (Tour guide 2 of Tour Agency, Dragon) Personally, I think an individual's formal position in the company is determined by their informal position in the organizational networks. I have noticed colleagues occasionally invite members of other agencies or tourism institutions for private dinners or afternoon tea. They will even organize short trips for small groups of these members. The members definitely include people from competing as well as partner organizations who will then provide similar invitations in return to my colleagues. (Executive of Tour Agency, Tiger) Without any hesitation, I would say our job is relation-oriented now. It is important to be able to clearly identify your friends as well as other relationships that could be classified as friendly. These people may be your competitors, cooperators, or simply coopetitors whose social interactions are not just based on exchanging duties and obligations for business, but also involve the desire to satisfy the need to feel a “belongingness” to the industry. (Technical Director, Phoenix)

4.2.4. Sharing Sharing is a cooperative practice rather than competitive. It is one of the major components in improving organizational performance and increasing competitive advantage. It involves an act of “sharing in” and “sharing out”, showing a degree of intimacy and a direction of reciprocal exchange in the marketplace. Sharing in this case consists of two dimensions, sharing information collectively and exchanging resources. 4.2.4.1. Sharing information collectively. In reality, tourism is a social system in which is embedded social relationships. Such relationships emerge from the interactions of different organizational institutions, including travel agencies, hotel chains, entertainment groups and governmental departments, and it is hierarchically stratified with specializing functions. Being part of the system, organizational members of the four operators needed to possess specific knowledge and specialized in their own functions; technical and instrumental, marketing,

256

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

resource procurement and sales. When they took over the tours, they had to continually coordinate to provide an integrated service experience; including lifts, restaurants, accommodations and other entertainment venues. Communication of tourism information between different tour operators was not common before the transformation of the tourism industry; however, when more multinational casino resorts were opened and tour operators entered the market, the context of Macau's tourism changed completely. Tour operators had to engage in complex and simultaneous competitive-cooperative relationships with these global rivals and partners. New casino resorts, restaurants and entertainment options were offered; it was critical for different firms and enterprises to communicate and share their tactics, information and knowledge, and to actively access the most updated tourism information both internally and externally, for sustainability. Therefore, openly and frequently communicating updated tourism information with different institutional partners was critical for a tour operator to maintain value-enhancing competitive functions. The frequent exchange of tourism information collectively happened in different functional departments, allowed organizational members of the four firms to get to know one another and gradually developed close relationships. Communication with different members also helped firms to integrate both internal and external knowledge. Intra-unit and inter-unit members of both collaborators and competitors enabled the personnel of the four firms to undertake a full assessment of new tourism issues that needed further attention; and where more information was required; the new tourism knowledge was consolidated in relation to past routines. Such inter-organizational communication led to reduced information asymmetry and increased operator transparency, therefore lowering their transaction cost and enhancing coopetitive value of the four firms. For example, tour guides were considered the pioneering members who interacted with various inbound tourists; they were able to obtain the most up-to-date tourist information. Related information and knowledge were first accessed by these tour guides and would then immediately be spread through internal and external members who shared the same communication system. In the past decade, the rapid development of digital communication facilitated the communication of the four firms. People from different tourism institutions established various WeChat or WhatsApp groups that allowed users to contribute content and connect to one another. Stakeholders from the four firms, whether rivals or allies were eager to join together in WeChat groups that ranged in size from 3 or 4 to more than 300 people. They shared the most up-to-date tourism information about different types of tourist activities, including transportation, lodging, exchange rates, details of current tourist trips and legal developments. Through sharing in the same groups, both intra and inter-firm exchange in various units (such as drivers in the transportation department, consultants of the agencies, and sales executives) speeded up the flow of related tourism information and enabled the employees to work flexibly and mutually. The formation of digital communication networks has facilitated the new sharing practices and marketplace exchanges in the tourism industry … Theoretically, tour guides from other companies should be considered as our rivals, but in practice, I consider them partners because we need them to access the most updated tourist information for making improvements and changes. (Tour Guide 4 of Tour Agency, Tiger Travel) In accordance with the new competitive environment, I can no longer differentiate between competitors or cooperators. As

technological advances have transformed people's information transfer processes, we now use several software applications to communicate, like WeChat, WhatsApp, and QQ. No matter whether they are your friends, acquaintances, or complete strangers, once they join the same social media, anyone can freely voice their ideas and thoughts on the same tourism topic. This form of communication is autonomous, informal, and open and is continuously happening. (General Manager, Dragon)

4.2.4.2. Exchanging resources. Through competition, tour operators worked independently to enhance performance by seeking resources and committing to individual goals in their own domain before 2002. The four operators in this case were not only suppliers of tourism products and services to group travelers, but they were also organizational buyers consuming services from restaurants, recreational shows and activities, accommodations, and souvenir shops within the tourism system. When compared to the international casino resorts, which provided similar services or packages, operators had to outsource certain parts of the tourism services to competitors for a lower operating cost, or risk holding unutilized assets. At the core of the exchange, Dragon, Tiger, Lion and the other competitors formed alliances strategically to share their resources in order to eliminate disadvantages. They were also followed by Phoenix after 2009 when the firm realized strategic alliance was necessary for long-term strategy. The operating cost of running a tour operator was highly capital-intensive which involved the acquisition of significant numbers of tour coaches, souvenir shops, tour guides and information technologies that support reservations and payments. Facing a fierce competitive environment, the strategic growth plan of these tour operators was different. Aiming for survival and fast growth in the industry, Tiger, Lion and Dragon chose to outsource their business lines; they jointly shared their tour buses and drivers for a pre-arranged fee in the peak season. In addition to providing a full range of vacation packages, the three firms, along with other tour operators referred business to one another and participated in joint promotions. Tourists were also recommended to each others’ jewellery shops for a 20 to 30% commission. Later on, Phoenix also collaborated with others even though it denied sharing resources with its competitors in the beginning. In a way, tour operators acted like independent tourism product and service providers, but they viewed themselves as strategic partners to provide tourists with an integrated service experience. This type of strategic cooperation is terrific. It lowers the cost of operations; while on the other, we can concentrate on providing high quality service to the tourists. In other words, our alliances help us to mitigate our weaknesses. (Executive 1 of Travel Agency, Lion) Our spare rooms are regularly sold to other travel agencies now. We do not care whether they are our competitors or cooperators; we only care that our rooms are reserved. If they don't reserve from us, they have to pay a higher price at other hotels. This is a win-win solution. (Senior Manager of Hotel, Dragon) Being one of the biggest and most competitive agencies in Macau before 2001, we thought that collaboration was not necessary. However, when the majority of our competitors began to strategically join together and share their resources resulting in higher profits, we began to see more economic

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

losses. We finally realized cooperation and sharing of resources would benefit our business. (CEO, Phoenix Travel)

4.2.5. Boundary spanning Boundary spanning is a collaborative aspect. It is defined as individual firm and groups interact with one another to obtain valuable information to help the innovative process. It involves a shift in the cognition of an organization that has the potential to exert a substantial effect on its long-term prospects. It happens through mobilizing others to accept and support the new rules, norms and beliefs, and identifying the normative system and values to change people's underlying mindsets. Boundary spanning includes the practice of enforcing rules and monitoring norms. 4.2.5.1. Enforcing rules. The laws and regulations of the tourism industry in Macau were obsolete before the government declared that tourism was the “dragon head” industry in 2002. Before 2004, the four operators felt free to employ anyone with or without a tour guide license, including both local residents and imported labor. Aiming to shape Macau as a world-class tourist destination, the Macau government updated and completed the new laws and regulations of travel agency activities and the tour guide profession according to the “Decree Law” of Macau (MTIN, 2004). Following the new laws and regulations, all the travel agencies were liable to employ Macau residents, and only tour guides who had been approved in a qualifying course; obtained a diploma or bachelor degree in the field of tourism. These courses had to be offered by certified institutions in Macau, or obtained from other qualified programs outside of the city. After the completion of educational approval, tour guides had to register and apply for tour cards from the Macau Government Tourism Office (MGTO). Tour guides were also requested to update their knowledge through seminars in related fields of tourism, culture and economy. This was one of the most important changes in exercising the tourism activities of the travel agencies. In addition, all the travel agencies were required to fulfill and exercise the activities stipulated by the laws and regulations set by the government. New rules were established to help promote the city as one of the best tourist destinations in Asia. The government arranged with the tour operators to implement a collective approach to marketing Macau. This meant that while supporting the new laws and regulations, the four firms had to cooperate with one another to practice the same rules, norms, and structures to achieve a common goal e to position Macau as the “World Centre of Tourism and Leisure”. Tour operators could only exercise reserved activities for remuneration under contracts signed by the tourists. It was forbidden for them to exercise or request funds, patrimonial advantages or any benefits from tour guides for rendering of services under the new framework of the law of tourism in Macau. New regulatory institutions had changed the business practices which were not compulsory before 2004. Tour operators were not allowed to push tourists into making purchases. Travel agencies could no longer offer “zero-fee-tours” (by which the tour price was below the cost of reception) to organizing tour operators in China. This was to prevent cutthroat price competition and to ensure the governance of tour operators. The main purpose of working together was to improve the service quality standards for the tourism industry as a whole. There were many problems because the operators did not cooperate enough in the past. They just did whatever they liked. Since nothing had changed during the previous decades,

257

tourism in Macau underwent a revolution in 2004, that was, two years after the liberalization of our gaming industry. Under the new scheme, we have tried to provide a framework for agencies to form a coalition. The role of the government is to maintain Macau as a major destination for world heritage sites. To achieve this goal, we have developed different forums for public consultation, industry exchange, and increased interactions of tour agencies. Tour operators need to work with us and collaborate with one another; it is just a matter of coherence among industry players. (Officer of Licensing Department, Macau Tourism Office)

4.2.5.2. Monitoring norms. Regardless of the critical role of government in framing a new business environment, individual tour operators also proactively participated in developing a coopetitive logic throughout the process of engaging in supporting the “new rules of game” in the tourism industry. Prior to tourism being proclaimed as the primary industry, the operational coordination between operators was minimal. Whether small or big tour operators, they organized a series of vacation packages by themselves. Firms competed with one another and considered themselves as independent providers. Nevertheless, the transformation of the tourism environment had changed their business practices; direct cooperation was spontaneous and promotional, and marketing activities were being organized by different tourism institutions together. A federation of the supply network of autonomous tourism organizations that operated under the direct supervision of the tourism authority had gradually been established. The Macau Tourism Department had received lots of complaints that concerned itineraries, souvenir sale practices, misleading shopping practices from Mainland group visitors in the previous fifteen years. Following the changes to tourism of Macau, the four operators started to realize the importance of adhering to the professional norms and practices in the tourism industry. They understood a few incidents of unscrupulous business practices that undermined the interest of tourists, could tarnish the overall image of the tourism industry of Macau. Although there was no legal contract signed between parties to govern their organizational practice or behavior, the four firms with other tour operators jointly worked together to tackle problems and threats and avoid creating a negative image of the city. In fulfilling Macau as a world-class destination, the four firms only chose to cooperate with the licensed travel agencies and tour guides. They also helped promulgate codes of conduct and the new regulations to their employees. In recent years, the four firms refused to take any transgression practices that were considered as legal activities and common tourism practices before, such as furnishing inauthentic goods and services to the tourists, requesting additional money that were not outlined in the contract provided for the tourist, and charging unreasonable prices for goods and services without prior disclosure. We only collaborate and interact with those who are qualified to provide high-quality tourist products and services. (Tour guide 2 of Travel Agency, Lion) There was no standard for pricing goods and services before. Now, we have new norms and practices, and only travel agencies within the network can influence pricing. Though the governance of market price is not based on a formal business contract between firms, we now jointly work together to decide an implicit market price. Rather than stifling competition, the

258

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

aim is to ensure excellent quality for tourists. (Executive of Tour Agency, Dragon)

4.3. Institutional evolution of tourism industry After more than a decade's tourism reform in Macau, the four operators found that the industry had shifted its focus from pure competition toward market coopetition. The overarching shift of liberalization of the gaming licenses, the transformation of tourism policies, and stimulation of new entrants had been defined as the initiatives of such changes. Although the government policy was a source of influence in the institutional environment, tour operators were also actively involved in creating a new tourism environment. The four firms reacted to the process of change through the adoption of newly emerged norms and practices (please refer to Table 4). Both Dragon and Phoenix focused on competition through exploiting and exploring practices throughout all the years. This was also followed by the late-comers e Tiger and Lion. Apart from competition, in response to the changing environment, Dragon, Lion and Tiger strategically collaborated with each other through bridging, sharing and boundary spanning with the local parties, which was also adopted by Phoenix in the later stage. It seems from the above case, that coopetitive logic was a natural behavior resulting from tourism organizations being involved in both competing and collaborating relationships throughout the period of institutional change. It was a process characterized by series of critical and complex institutional events. These events had changed the predominant mindset of perceived relationships between individual firms in regard to competition and common understanding of cooperation, and so changed their norms, values and practices. The perception of institutional transformation helped to shape their logics from pure individual competition to both competition and cooperation in a new changing environment. The findings reveal that both competition and cooperation were important for the adoption of change. The exploiting and exploring practices of competition played an important role when individuals viewed them from a micro perception of independent relationships with their competitors. From a macro analysis, bridging, sharing and boundary spanning behaviors of cooperation were critical when organizations perceived themselves as interdependent strategic partners to achieve common benefits in creating a world-class tourism destination. The relationship of this logic (coopetition) is summarized in Fig. 2. 5. Discussions This study advances the nascent understanding about coopetition research in tourism destinations on two fronts. First, while previous studies on coopetition argue for the importance of the tourism organizations engaging in competitive and cooperative relationships (Della Corte & Aria, 2016), there is limited evidence for how these two conflicting-yet-complementary logics can be nurtured and developed during institutional transition (Wang & Fesenmaier, 2007). In this study, the dynamic mechanisms governing the competition and cooperation between tourism organizations are found to co-evolve with the institutional environment (Fyall & Garrod, 2004). Critical events occurring in the institutional environment are perceived to have a cumulative effect on changing the institutional logics of coopetition, from competition to coope€ m & Hagberg-Andersson, 2012). The dynamic relatition (Tidstro tionship between individual companies and market evolution

portrayed in our conceptual model (See Fig. 2) reveals the developmental path of a tourism destination. Specifically, the changing logic of exploiting and exploring in a pre-liberalization environment, shifting to exploiting, exploring, bridging, sharing and boundary spanning in a post-liberalization context, represents a changing pattern of business practices among tourism actors. The focus of change takes place from non-interactive behavior on the individual level that is based on competition, to a higher level of coopetitive interaction between tourism actors, related to different time segments and the development of a tourism destination. In this sense, the evolution of coopetition in tourism destinations is a complex process that allows different tourism actors to evolve together with the changing institutional environment, where competitive and cooperative dynamics co-exist among different tourism suppliers or operators. Second, this study sheds light on the evolutional dynamics of coopetition among multi-stakeholders (Aas et al., 2005; Byrd, Bosley, & Dronberger, 2009) in the tourism context through the conceptual lens of institutional logics. Drawing from the changing insights and perceptions of tour operators, regulators and suppliers in Macau, we reveal how the conflicting-yet-complementary logics of competition and cooperation co-exist and interact among different constituents in a tourism destination, an issue that is under-explored in the previous studies (Smets, Jarzabkowski, Burke, & Spee, 2015; Smets et al., 2012; Venkataraman, Vermeulen, Raaijmakers, & Mair, 2016). The tourism destination as a social context consists of a multitude of nested relationships between individuals within firms, firms within the industry, and the industry with other related institutions (Ottenbacher, Harrington, & Parsa, 2009). Our findings indicate that the dominant logics (Prahalad & Bettis, 1986) and subsequent changes are shaped by the shared values and norms across the micro, meso and macro levels of tourism institutions (Wang & Krakover, 2008). These encompassing layers of the tourism industry evolve when different perceptions of multistakeholders converge with one another to form new institutional logics of practice. In particular, the paradigm shifts from the logic of competition to coopetition was initially driven by the individual actors as a response to the changes of institutional environment, which subsequently affected the norms or values of other stakeholders at higher levels. Individual firms need to compete and cooperate simultaneously in order to attain the individual and common benefits within the group of autonomous stakeholders who engage in an interactive process of institutional logics change guided by shared norms and values within the same social structure (Thornton, Jones, & Kury, 2005). In addition, the presence of multilevel institutional logics also provides new insights into the product development strategy of the tourism sector (Light & Prentice, 1994; Romero & Tejada, 2011). So tourism actors may adopt different responses according to the situation, such as competing (exploiting and exploring) for homogenous resources, and cooperating (bridging, sharing and boundary spanning) for lowering cost and risk, increasing distribution channels and co-marketing, and shaping business practice with the aim of better tourism destination development. This study indicates three practical implications of understanding the prevalent norms and values underlying the complexity of coopetition in the tourism industry. First, norm and value differences among the tourism actors can help explain the diversities of their coopetitive behaviors. Managers and decisionmakers should thus closely monitor the changes of values and norms occurring in the industry, which in turn will affect how their companies’ respond. Second, managers should realize the benefits

Table 4 Institutional changes and emergence of organizational practices among the tour operators during 2001-2015. Year

Critical events

Type of Institutional Change

Practices emerged and adopted by the tour operators

Orientation

Before 2002

⁃ Macau's tourism industry before the monopolization of the casino business (before 2002) ⁃ Macau SAR decided to grant out 3 gaming concessions. This policy direction was: “tourism, gaming, conventions and exhibitions as the ‘head’, and the service industry as the ‘body’, driving the overall development of other industries.” ⁃ Except the original casino licence, Macau MSR government liberalized 2 new casino operators to construct comprehensive casino tourism ⁃ Macau MSR government positioned Macau to be one of the “World Casino Tourism” destinations ⁃ Macau MSR government adopted restrictive labor immigration practices to protect labor force after the liberalization of the gaming industry ⁃ More tour operators had entered the tourism industry

Economic, social and cultural

⁃ Hotel Lisboa, Ruins of St. Paul,Temple A Ma, Ha Sac beach were visited the most before 2002 ⁃ Promoted more leisure and entertainment for the development of Macau's casino tourism

Competitive

December 2001

February 2002

2002

Regulatory

Regulatory

Economic, social and cultural Regulatory

Offered salary above market price Hired part-time staff and imported Mainland Chinese labor Employees had to take job rotations Offered lease buyback deals to employees Offered “zero-fee tours” and “negative-reception-fee” tours Offered higher tour budget to the upstream suppliers Approached new upstream suppliers Formed partnerships with tour operators to pursue joint activities Established interpersonal relationships with employees in other tour operators Enhanced communication with employees in other tour operators through new media Shared tour buses and drivers Jointly promoted and sold tour products and services Recommended tour products and services provided by other operators to their own customers Sands became an important spot in the very beginning Formed close business relationship with the government sectors

Competitive Competitive Competitive Competitive Competitive Competitive Competitive Cooperative Cooperative

⁃ Established a tourism organization to govern intra-industry discipline

Cooperative

⁃ Participated in promotional and marketing activities organized by the tourism institutions ⁃ Chose to collaborate with the licensed travel agencies and tour guides ⁃ Abandoned the practice of “zero-fee-tours” ⁃ Wynn Resort, MGM Grand, Galaxy Resort and Venetian Resort became the most visited new spots for visitors

Cooperative

⁃ ⁃ ⁃

September 2006

2007

2011 2015

⁃ The first casino of Venetian, Casino Sands, was opened ⁃ Macau Government Tourism Office updated tourism laws and regulations ⁃ Tour guides and transferits must be approved by Macau Government Tourism Office ⁃ Application for the licensed tour operators had been tightened up

⁃ Wynn Resorts was opened; it entertained visitors with a spectacular tree, golden dragon and a magical Moon jellyfish aquarium ⁃ The Venetian constructed the Cotai Strip, which was a mini version of the Las Vegas Strip e opened in summer. It had the largest single-structure hotel building e (with 2 large shopping malls) in Asia, equipped to host large-scale conventions and exhibitions (2007) ⁃ Galaxy Macau, a mega-casino resort opened ⁃ 24 new casino resorts/hotels with unique designs had been built

Economic, social and cultural Regulatory

Economic, social and cultural

⁃ ⁃

Cooperative Cooperative Cooperative Cooperative Competitive Cooperative

Cooperative Cooperative Competitive

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Economic, social and cultural

⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃

May2004 November2004

Competitive

Economic, social and cultural

Economic, social and cultural Economic, social and cultural

259

260

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

Fig. 2. Coopetition during institutional evolution.

of adopting the logic of coopetition and adjust their related strategies accordingly. As seen in the study, it would be difficult for managers to decide the so-called “best practices” in tourism industry while competition and cooperation co-evolve. Any action may elicit a coopetitive response in business e which demonstrates an interplay of conflicting-yet-complementary logics. Last, the idea that tourism operators need to engage in those coopetitive practices reveals the institutional complexities of the tourism industry, which goes beyond roles as mere product and service providers. Tourism operators not only act as producers of tourist experience, but they also serve as suppliers and customers for other operators. The tourism industry entails a constellation of products and services that are distributed through a web of operators and other related tourism actors. Such a complex tourism system often creates unnecessary hurdles and obstacles which confound organizational and destination goals. Managers have to realize the tradeoffs between short-term company interest and a long-term advantage of destination growth by participating in a complex web of activities (e.g., exploiting, exploring, bridging, sharing and boundary spanning), building linkages and complementing other tourism operators.

6. Conclusions Drawing from a qualitative study of four tour operators in Macau, the study examined how their institutional logics unfolded over the last decade subsequent to the changes in the broader institutional environment. The findings reveal the dynamic evolution of the dominant logics in the Macau tourism sector, shifting from a pure form of competition before gaming liberalization to coopetition afterward. The adoption of new practices such as bridging, sharing and boundary spanning added a new cooperative dimension to their previously competitive behavior (exploiting and exploring) and signified a paradigm shift for the tour operators. They appeared to change their mindset from the emphasis of individual benefits to the recognition of long-term benefits arisen from the interdependence between inter-organizations. It is revealed that changes in the institutional environment have acted as the main drivers of institutional logics in the tourism industry, which in turn shaped the development of coopetitive behaviors and practices among the tour operators. This analysis is subject to the limitations of a case study in a particular context. The setting of tourism in Macau includes a number of unique features, including the liberalization of the gaming and tourism industry, the prominent role of regulatory changes due to the strict control of licensing and industrial policy, market volatility triggered by the changes of globalized tourism

products, services and technology, and the agglomeration of institutional organizations. As a result, the conceptual model (Fig. 2) proposed in this case is probably idiosyncratic of different institutional incidents rather than a general phenomenon that can be applied in all destinations. Owning to the exploratory nature of the present case, the findings in this study could be researched again in other transitioning tourism regions to improve the themes identified in the present case. Second, this specific case provides a natural experiment happening in a real-world context that is possibly generalized and applied with higher confidence to similar aspects and issue of cooperation and competition building involving the institutional tourism transition. Yet, these limitations provide opportunities for future studies, especially for tourism destinations that are undergoing an institutional transition. While the results in this case shed some light on the process by analyzing both institutional logics and coopetition, the quantitative method indeed is needed to examine a number of significant issues that have been identified. 7. The contributions of authors Veronica Hoi In Fong made substantial contributions to the design of the research, acquisition of data, analysis, interpretation of data, participation in building theories and drafting of manuscript. IpKin Anthony Wong was involved in the design of the research, collection of data, and interpretation of data. He contributed significantly to the revision of the manuscript and provision of proofreading and translation assistance. Jacky Fok Loi Hong contributed to the theorization and design of research. He critically evaluated the core intellectual contents and provided final approval of revised and re-submitted versions. Appendix A. Interview guide (for the tour operators) Questions to all respondents: 1. 2. 3. 4. 5. 6.

How did the Tourism Industry change in the past decade? Who or what institutions led the changes ahead? How did these changes affect your organization? How did you respond to these changes? Why did you take these actions? What had happened to your organization after these actions had been taken?

Appendix B. Interview guide (for the tourism institutions) Questions to all respondents: 1. How did the Tourism Industry change in the past decade? 2. Who or what institutions led the changes ahead? 3. Describe the changes your institution had made to the Tourism Industry (e.g. policies, regulations, programmes and activities, etc.) 4. Why did your institution make these changes (if any)? 5. How effective or ineffective were these changes (if any)? References Aas, C., Ladkin, A., & Fletcher, J. (2005). Stakeholder collaboration and heritage management. Annals of Tourism Research, 32(1), 28e48. Barley, S. R., & Tolbert, P. S. (1997). Institutionalization and structuration: Studying the links between action and institution. Organization Studies, 18(1), 93e117. Beritelli, P., & Laesser, C. (2011). Power dimensions and influence reputation in

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262 tourist destinations: Empirical evidence from a network of actors and stakeholders. Tourism Management, 32, 1299e1309. Bhat, S. S., & Milne, S. (2008). Network effects on cooperation in destination website development. Tourism Management, 29(6), 1131e1140. Bleeke, B., & Ernst, D. (1993). Collaborating to compete. New York, NY: Wiley. Bonel, E., & Rocco, E. (2007). Coopeting to survive: Surviving coopetition. International Studies of Management and Organization, 37(2), 70e96. Bramwell, B., & Lane, B. (2000). Tourism collaboration and Partnerships: Politics, practice and sustainability. Clevedon: Channel View Publications. Bramwell, B., & Rawding, L. (1994). Tourism marketing organizations in industrial cities: Organizations, objectives and urban governance. Tourism Management, 15(6), 425e434. Brandenburger, A. M., & Nalebuff, B. J. (1996). Co-opetition. New York: Doubleday. Byrd, E. T., Bosley, H. E., & Dronberger, M. G. (2009). Comparsions of stakeholder perceptions of tourism impacts in rurla easter North Carolina. Tourism Management, 30(5), 693e703. Cabiddu, F., Lui, T. W., & Piccoli, G. (2013). Managing value co-creation in the tourism industry. Annals of Tourism Research, 42, 86e107. Caffyn, A. (2000). Is there a tourism partnership life cycle? In W. Bram, & B. Lane (Eds.), Tourism collaboration and Partnerships: Politics, practice and sustainability (pp. 200e229). Clevedon: Channel View Publications. Cai, L. A. (2002). Cooperative branding for rural destinations. Annals of Tourism Research, 29(3), 720e742. Carlisle, S., Johansen, A., & Kunc, M. (2016). Strategic foresight for (coastal) urban tourism market complexity: The case of Bournemouth. Tourism Management, 54, 81e95. Carlisle, S., Kunc, M., Jones, E., & Tiffin, S. (2013). Supporting innovation for tourism development through multi-stakeholder approaches: Experiences from Africa. Tourism Management, 35, 59e69. Corte, V. D., & Aria, M. (2016). Coopetition and sustainable competitive advantage. The case of tourist destinations. Tourism Management, 54, 524e540. Crotts, J. C., & Wilson, D. (1995). An integrated model of buyer-seller relationships in the international travel trade. Progress in Tourism and Hospitality Research, 1(2), 125e140. Czernek, K., & Czakon, W. (2016). Trust-building processes in tourist coopetition: The case of a Polish region. Tourism Management, 52, 380e394. Dacin, M. T., Goodstein, J., & Scott, W. R. (2002). Institutional theory and institutional change: Introduction to the special research forum. Academy of Management Journal, 45(1), 43e56. Dagnino, G. B. (2009). Coopetition strategy - a new kind of interfirm dynamics for value creation. In G. B. Dagnino, & E. Rocco (Eds.), Coopetition strategy (pp. 25e43). London: Routledge. Daiute, C., & Lightfoot, C. (2004). Narrative Analysis: Studying the development of individuals in society. London: Sage. Della Corte, V., & Aria, M. (2016). Coopetition and sustainable competitive advantage. The case of tourist destinations. Tourism Management, 54, 524e540. Edgell, D. L. S., DelMastro Allen, M., Smitch, G., & Swanson, J. R. (2013). Tourism policy and Planning: Yesterday, today, and tomorrow (2 ed.). Routledge. Edmondson, A. C., & Ecmanus, S. E. (2007). Methodological fit in management field research. Academy of Management Review, 32(4), 1155e1179. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532e550. Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges. Academy of Management Journal, 50(1), 25e32. Ford, D., Gadde, L.-E., Håkansson, H., Snehota, I., & Waluszewski, A. (2011). Analyzing business interaction. IMP Journal, 4(1), 82e105. Friedland, R., & Alford, R. R. (1991). Bringing society back in: Symbols, practices, and institutional contradictions. In P. J. DiMaggio, & W. W. Powell (Eds.), The new institutionalism in organizational analysis (pp. 2320e2363). Chicago: University of Chicago Press. Fyall, A., & Garrod, B. (2004). Tourism marketing: A collaborative approach. Cleveland: Channel View Publications. n-Herrera, J. J. (2014). Does the tourism industry coGarcía-Cabrera, A. M., & Dura evolve? Annals of Tourism Research, 47, 81e83. Garud, R., & Rappa, M. A. (1994). A socio-cognitive model of technological evolution: The case of cochlear implants. Organization Science, 5, 344e362. Giddens, A. (1984). The constitution of society. Berkeley: University of California Press. Gnyawali, D. R., & He, J. (2006). Impact of coopetition on firm competitive behavior: An empirical examination. Journal of Management, 32(4), 507e530. Goeldner, C. R., & Ritchie, B. J. R. (2003). Tourism: Principles, practices, philosophies (9 ed.). Hoboken, NJ: Wiley. €ngsjo €, Y. V. F. (2003). Destination networking: Co-opetition in peripheral surGra roundings. International Journal of Physical Distribution & Logistics Management, 33(5), 427e448. Greenwood, R., Díaz, A. M., Li, S. X., & Lorente, J. C. (2010). The multiplicity of institutional logics and the heterogeneity of organizational responses. Organization Science, 21, 521e539. Guo, X., Zheng, X., Ling, L., & Yang, C. (2014). Online coopetition between hotels and online travel agencies: From the perspective of cash back after stay. Tourism Management Perspectives, 12, 104e112. Huang, L. (2006). Building up a B2B e-commerce strategic alliance model under an uncertain environment for Taiwan's travel agencies. Tourism Management, 27(6), 1308e1320. Kraatz, M. S., & Block, E. S. (2008). Organizational implications of institutional

261

pluralism. In R. Greenwood, C. Oliver, R. Suddaby, & K. Sahlin-Anderson (Eds.), Handbook of organizational institutionalism (pp. 243e275). London: Sage. Lado, A. A., Boyd, N. G., & Hanlon, S. C. (1997). Competition, cooperation, and the search for economic rents: A syncretic model. Academy of Management Review, 22(1), 110e141. Lavandoski, J., Silva, J. A., & Vargas-Sanchez, A. (2013). Institutional theory in tourism studies: Evidence and future directions. Spatial and Organizational Dynamics - Discussion Papers: Challenging Services, 13, 31e47. Retrieved date, 08/ 07/2016. Retrieved from www.cieo.pt/discussion_papers_previous_editions. php. Lemmetyinen, A., & Go, F. M. (2009). The key capabilities required for managing tourism business networks. Tourism Management, 30(1), 31e40. Light, D., & Prentice, R. (1994). Market-based product development in heritage tourism. Tourism Management, 15(1), 27e36. Lok, J. (2010). Institutional logics as identity projects. Academy of Management Journal, 53(6), 1305e1335. Madhavan, R., Gnyawali, D. R., & He, J. (2004). Two's company, three's a crowd? Triads in cooperative-competitive networks. Academy of Management Journal, 47(6), 918e927. Marcoz, E. M., Mauri, C., Maggioni, I., & Cantù, C. (2016). Benefits from service bundling in destination branding: The role of trust in enhancing cooperation among operators in the hospitality industry. International Journal of Tourism Research, 18(3), 260e268. Mariani, M. M., Buhalis, D., Longhi, C., & Vitouladiti, O. (2014). Managing change in tourism destinations: Key issues and current trends. Journal of Destination Marketing & Management, 2(4), 269e272. €nen, M. (2014). The relevance of public-private partnerships Mariani, M. M., & Kyla in coopetition: Empirical evidence from the tourism sector. International Journal of Business Environment, 6(1), 106e115. MTIN. (2004). Series 1 supplement of the 52nd issue of the official bullentin of the Macao speicial administrance region dated 30th december 2004. Retrieved date, 28/04/2016. Retrieved from http://images.io.gov.mo/bo/i/2004/52/rega-422004.pdf. North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge, U.K: Cambridge University Press. Novelli, M., Schmitz, B., & Spencer, T. (2006). Networks, clusters and innovation in tourism: A UK experience. Tourism Management, 27(6), 1141e1152. Ong, C.-E., & Du Cros, H. (2012). The post-mao gazes: Chinese backpackers in Macau. Annals of Tourism Research, 39(2), 735e754. Ottenbacher, M. C., & Harrington, R. J. (2009). Institutional, cultural and contextual factors: Potential drivers of the culinary innovation process. Tourism and Hospitality Research, 9, 235e249. Ottenbacher, M., Harrington, R., & Parsa, H. G. (2009). Defining the hospitality discipline: A discussion of pedagogical and research implications. Journal of Hospitality and Tourism Research, 33(3), 263e283. Patsouratis, V., Frangouli, Z., & Anastasopoulos, G. (2005). Competition in tourism among the Mediterranean countries. Applied Economics, 37(16), 1865e1870. Pearce, D. (1989). Tourist development. New York: Wiley. Pettigrew, A. M. (1990). Longitudinal field research on change: Theory and practice. Organization Science, 1(3), 267e292. Porter, M. E. (1987). From competitive advantage to corporate strategy. Harvard Business Review, 65(3), 43e43. Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7(6), 485e501. Pratt, M. G. (2009). For the lack of a boilerplate: Tips on writing up (and reviewing) qualitative research. Academy of Management Journal, 52(5), 856e862. Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics. Organization Studies, 30(6), 629e652. Ritchie, J. R., & Chouch, G. I. (2003). A competitive destination: A sustainable tourism perspective. CABI. Romero, I., & Tejada, P. (2011). A multi-level approach to the study of production chains in the tourism sector. Tourism Management, 32(2), 297e306. Roxas, B., & Chadee, D. (2013). Effects of formal institutions on the performance of the tourism sector in the Philippines: The mediating role of entrepreneurial orientation. Tourism Management, 37, 1e12. Rumelt, R. P. (1987). Theory, strategy, and entrepreneurship. In D. Teece (Ed.), The competitive challenge (pp. 135e158). Cambridge, MA: Ballinger. Saxena, G. (2005). Relationships, networks, and the learnning regions: Case evidence from the peak district national park. Tourism Management, 26(3), 277e289. Scott, N., Cooper, C., & Baggio, R. (2008). Destination netowrks: Four australian cases. Annals of Tourism Research, 35(1), 169e188. Shy, O. (1995). Industrial Organization: Theory and applications. MIT Press. Siggelkow, N. (2007). Persuasion with case studies. Academy of Management Journal, 50(1), 20e24. Siu, R. C. S. (2015). A SWOT analysis of Macao's development as a “world tourism and leisure center”. Journal of Macau Economy (In Chinese), 39, 27e47. Slater, S. F., & Narver, J. C. (1994). Does competitive environment moderate the market orientation-performance relationship? Journal of Marketing, 58(1), 46e55. Smets, M., Jarzabkowski, P., Burke, G., & Spee, P. (2015). Reinsurance trading in Lloyd's of London: Balancing conflicting-yet-complementary logics in practice. Academy Management Journal, 58, 932e970. Smets, M., Morris, T., & Greenwood, R. (2012). From practice to field: A multilevel model of practice-driven institutional change. Academy of Management Journal,

262

V.H.I. Fong et al. / Tourism Management 66 (2018) 244e262

55(4), 877e904. Stamboulis, Y., & Skayannis, P. (2003). Innovation strategies and technology for experience-based tourism. Tourism Management, 24(1), 35e43. Strauss, A., & Corbin, J. (2008). Basics of qualitative research:techniques and procedures for developing grounded theory (3 ed.). London: Sage. Thornton, P. H., Jones, C., & Kury, K. (2005). Institutional logics and institutional change in organizations: Transformation in accounting, architecture, and publishing. In C. Jones, & P. H. Thornton (Eds.), Vol. 23. Transformation in cultural industries (pp. 125e170). Emerald Group Publishing Limited. Thornton, P. H., & Ocasio, W. (2008). Institutional logics. In G. Royston, C. Oliver, S. Roy, & S. Kerstin (Eds.), The SAGE handbook of organizational institutionalism (pp. 99e129). Sage Publications Ltd. Thornton, P. H., Ocasio, W., & Lounsbury, M. (2012). The institutional logics perspective: A new approach to culture, structure, and process. Oxyford University Press. €m, A., & Hagberg-Andersson, Å. (2012). Critical events in time and space Tidstro when cooperation turns into competition in business relationships. Industrial Marketing Management, 41(2), 333e343. Townley, B. (1997). The institutional logic of performance appraisal. Organization Studies, 18(2), 261e286. UNESCO. (2016). Historic Centre of Macao. Retrieved date, 28/07/2016. Retrieved from http://whc.unesco.org/en/list/1110. Venkataraman, H., Vermeulen, P., Raaijmakers, A., & Mair, J. (2016). Market meets community: Institutional logics as strategic resources for development work. Organization Studies, 37(5), 709e733. Vernon, J. S., Essex, D. P., & Curry, K. (2005). Collaborative policymaking. Annals of Tourism Research, 32(2), 325e345. Volgger, M., & Pechlaner, H. (2014). Requirements for destination management organizatons in destination governance: Understanding DMO success. Tourism Management, 41, 64e75. Wahab, S., & Cooper, C. (2001). Tourism in the age of globalization. London: Routledge. Wang, Y. (2008). Collaborative destination marketing: Understanding the dynamic process. Journal of Travel Research, 47(2), 151e166. Wang, D., & Ap, J. (2013). Factors affecting tourism policy implementation: A conceptual framework and a case study in China. Tourism Management, 36, 221e233. Wang, Y., & Fesenmaier, D. R. (2007). Collaborative destination marketing: A case study of elkhart county, Indiana. Tourism Management, 28(3), 863e875. Wang, Y., & Krakover, S. (2008). Destination marketing: Competition, cooperation or coopetition? International Journal of Contemporary Hospitality Management, 20(2), 126e141. Wong, I. A., McKercher, B., & Li, X. (2016). East meets west: Tourist interest in hybrid culture at postcolonial destinations. Journal of Travel Research, 55(5), 628e642. Wong, I. A., & Siu, R. C. S. (2015). Casino tourism: How entrepreneurship changes the game in Macao. In G. Baldacchino (Ed.), Entrepreneurship in small Island states and territories. Taylor & Francis. Yin, R. K. (2009). Case study Research: Design and methods (4 ed.). Newbury Park, CA: Sage.

Veronica Hoi In Fong is an Assistant Professor in the School of Business at Macau University of Science and Technology, Macau, China. She received her PhD from the University of Macau. Her research interests are strategic management and Chinese studies in the global context. Her articles have appeared in International Journal of Hospitality Management, International Journal of Contemporary Hospitality Management and Journal of Hospitality Marketing and Management.

Dr. IpKin Anthony Wong is a professor at City University of Macau, Macau, China. He has a wide range of teaching and research interests especially in tourist motivation and behaviors, consumer behaviors, tourism and service marketing, casino gaming, and research methods. His articles have appeared in Tourism Management, Journal of Travel Research, Journal of Business Research, International Journal of Hospitality Management, Cornell Hospitality Quarterly, Journal of Hospitality & Tourism Research, and more; and he is currently serving as an advisory board member for leading tourism and hospitality journals including Journal of Travel Research, International Journal of Hospitality Management, Cornell Hospitality Quarterly, International Journal of Contemporary Hospitality Management, and Journal of Business Research.

Jacky Fok Loi Hong is an Associate Professor of Management at the University of Macau, Macau. He received his PhD from Lancaster University. Since early 2000, he has been researching and publishing papers on the broader themes of organizational learning and knowledge management in the Asian context in journals such as Journal of Management Studies, Organization Studies, Journal of World Business, Management Learning, Journal of International Management and International Business Review. He is on the editorial review board of Journal of World Business, Management Learning, Critical Perspectives on International Business and Learning Organization among others.