Olav Sorenson<\/strong><\/p>\n A growing body of research documents the role that organizational learning plays in improving \ufb01rm performance over time. To date, however, this literature has given limited attention to the effect that the internal structure of the \ufb01rm can have on generating differences in these learning rates. This paper focuses on the degree to which interdependence\u2014and in particular one structural characteristic that generates interdependence, vertical integration\u2014affects organizational learning. Firms face a trade-off. In stable environments, vertically integrating severely limits the organization\u2019s ability to learn by doing because boundedly rational managers \ufb01nd the optimization of operations dif\ufb01cult when making highly interdependent choices. As the volatility of the environment increases though, integration can facilitate learning-by-doing by buffering activities within the \ufb01rm from instability in the external environment. Thus, \ufb01rms with a high degree of interdependence suffer less in these environments. Tests of these hypotheses on the growth and exit rates of computer workstation manufacturers support this thesis.<\/p>\n Management Science<\/a><\/em><\/strong>, 49 (2003): 446-463<\/a><\/p>\n