Tony S. Wirjanto

Role of IT executives in the firm's ability to achieve competitive advantage through IT capability

Contrary to prior studies that have tried to examine the role of IT capabilities (ITC) on firm performance in isolation from the role of senior IT executives, we propose that the two are linked. More specifically we argue that there is a positive relationship between the structural power of senior IT executives and the likelihood that the firm will develop superior ITC. Furthermore, the contribution of ITC to a firms competitive advantage is much stronger in firms with powerful senior IT executives as they are the driving force that may ensure the continuous renewal of ITC. We develop a two-stage econometric model designed to test this chain hypothesis that the structural power of senior IT executives will affect a firms ability to achieve superior ITC, in turn driving firm performance. Empirical evidence based on a sample of large US firms strongly supports both of our hypotheses.

Intratemporal Substitution and Government Spending

In this paper, we examine the idea that a general model of consumption should allow for the direct effect of government expenditures in a two-good permanent-income model. We show, given an assumed preference specification, that there is a cointegration restriction implied by an intraperiod first-order condition of the model. This restriction leads to a linear deterministic cointegration relation between government spending, private consumption, and their relative price that is supported by the data. Using this restriction to recover the preference parameters, we estimate the intraperiod elasticity of substitution for both government and private consumption to be about 0.9. Overall, we find consistent empirical evidence in support of our model.

Estimating the impacts of cigarette taxes on youth smoking participation, initiation, and persistence: empirical evidence from Canada

In response to the widespread availability of illegal contraband, the federal and five provincial governments in Canada implemented a 40-60% reduction to cigarette excise taxes in February 1994. We exploit this unique and discrete policy shock by estimating the effects of cigarette taxes on youth smoking with data from the 1992-1996 Waterloo Smoking Prevention Program, 1991 General Social Survey, 1994 Youth Smoking Survey, 1996-1997 and 1998-1999 National population Health Surveys, and the 1999 Canadian Tobacco Use Monitoring Survey. Empirical estimates yield daily and occasional participation elasticities from -0.10 to -0.14, which is consistent with findings from recent U.S.-based research. A key contribution of this research is in the analysis of lower taxes on a panel of 591 youths from the Waterloo Smoking Prevention Program, who did not smoke in 1993, but 43% of whom confirm smoking participation following the tax reduction. Employing these data reveals elasticities from -0.2 to -0.5, which suggest that even significant and discrete changes in taxes might have limited impacts on the initiation and persistence of youth smoking.

Sustainability of a Firm's Reputation for Information Technology Capability: The Role of Senior IT Executives

This study investigates the development and sustainability of a firms information technology (IT) capability reputation from an IT executives standpoint. Building on institutional theory, we argue that IT executives will try to achieve external legitimacy (i.e., project an image of superior IT capability to external stakeholders) in the hope that the top management team and board members will reciprocate by elevating the internal legitimacy of IT executives. Firms that develop such a culture of reciprocity with their IT executives are more likely to sustain their IT capability reputation. Econometric results based on panel data for 1,326 large U.S. firms from a wide spectrum of industries over a 13-year period (1997-2009) validate these predictions. More specifically, we find that IT executives with greater structural power (e.g., higher job titles) or IT-related expert power (e.g., IT-related education or experience) are more likely to attract public recognition for their firms IT capability. Firms that build such an IT capability reputation are more likely to promote their IT executives, and IT executives who are promoted are more likely to stay longer with their firms. This continuity in IT strategic leadership is positively associated with the firms ability to sustain its IT capability reputation. Our findings have important practical implications related to a firms IT reputation strategy as well as the motivation and career of IT executives. Firms wanting to develop and sustain their IT capability reputation would do well to foster the creation of a cycle of positive reciprocity with their IT executives. IT executives hoping to increase their power within their firms top management team and improve the legitimacy of the firms IT organization need to project an image of IT superiority to external stakeholders.

Aggregate Consumption Behaviour and Liquidity Constraints: The Canadian Evidence

This paper considers a general permanent-income model in which a fraction of consumers in the economy is liquidity constrained. Consumption growth rate for these individuals is related to the growth rate of their income and the level of real interest rates. The interest-rate coefficient is predicted to be smaller in the presence of liquidity constraints. Empirically, liquidity constraints are found to be important, and the estimated intertemporal elasticity of substitution parameter is much larger than the one obtained by estimating the standard representative agent model. Lastly, there is some evidence of structural changes over the sample period, which are associated with the 1982 recession.

A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States

This paper tests the prediction of the permanent income hypothesis (PIH) that news about future income induce a revision in consumption equal to the revision in permanent income. We use time-series data from 48 contiguous U.S. states to perform the test. The empirical results provide some support for the PIH across states.

Seasonal Unit-Root Tests on Canadian Macroeconomic Time Series

In this note we subject some Canadian macroeconomic time series to test of seasonal and non-seasonal unit roots. Overall we find evidence that the series are integrated at some of the seasonal frequencies as well as at a zero frequency.

Intertemporal Substitution, Imports and the Permanent Income Model

We examine the importance of intertemporal substitution in U.S. import consumption using a model of permanent income that allows for random preference shocks and additive separability. The latter feature allows us to take two estimation approaches. In the first approach, we show that there is a cointegrating restriction imposed by the first-order conditions of the model which allows us to estimate the intertemporal elasticity of imported and domestic goods consumption. In the second approach, we estimate the Euler equations using generalized method of moments. This approach, however, requires us to place some restrictive assumptions on the model that are not required for the first estimation approach. Thus, the two different approaches allow an assessment of the severity of these restrictive assumptions which are often imposed in the literature.

Testing the Permanent Income Hypothesis: The Evidence from Canadian Data

This paper investigates whether there are variants of the permanent income model that are consistent with seasonally unadjusted quarterly postwar Canadian data. The analysis is based on a misspecification-test equation which nests the standard permanent income model. The results obtained are somewhat unfavorable to the permanent-income hypothesis. The same results also apply to more general models in which the real interest rate is time-varying and the utility function is nonseparable in consumption and the stock of durable goods.

Exchange rate of the US dollar and the J curve: the case of oil exporting countries

This study examines the effects of changes in the exchange rate of the US dollar on the trade balances of three oil-exporting countries, namely Iran, Venezuela and Saudi Arabia. An exchange rate pass-through model is applied to allow changes in the exchange rate of the dollar to affect prices of traded goods. Then, the impact of changes in prices on the quantities of imports and exports of these economies is estimated. The results suggest a partial exchange rate pass-through to these countries’ import and export prices in terms of the US dollar. While the three countries raise the price of their primary export (namely crude oil) in response to a depreciation of the dollar, Saudi Arabia’s long-run pricing strategy in securing a larger market share stands in contrast to that of the two other OPEC members. The sum of the estimated long-run price elasticities of demand for imports and exports is found to exceed unity for Iran and Venezuela, but less than unity for Saudi Arabia.