Purpose Underpinned by stakeholder theory, this research examined the perspectives of bar and restaurant business owners and operators on their participation in the tip credit program. Design/methodology/approach Exploratory mixed methods were employed. Study 1 involved in-depth interviews with 13 restaurant decision-makers to uncover why and how owners and operators engage with or abstain from the tip credit. Study 2 employed an experimental design (n = 182) to test the effects of reactive versus proactive messaging and instrumental versus moral rationales on intentions to pay above the subminimum wage. Findings Study 1 revealed five themes: challenges of not using the tip credit, a transition to a living wage, tipping practices and policies, restaurant industry norms, and labor costs and management. Study 2 results showed that reactive messages with moral rationales significantly influenced ethical considerations and social responsibility among stakeholders. Practical implications Despite challenges surrounding the transition from using the tip credit, the benefits far outweigh the costs. A moral and proactive message increases buy-in from operators. Originality/value This research contributes new insights into the decision-making processes of key stakeholders in the tipping culture, highlighting the social implications of moving towards sustainable wage practices.
Cain et al. (Sat,) studied this question.