WP 1: Exploring knowledge and innovation activities of European firms Work package 1 explores the knowledge generation and utilisation process in enterprises on the basis of detailed microeconomic information contained in the national and Community Innovation Surveys combined with other firm-level data-sets. It will address questions with regard to: which firms innovate and which do not? Which innovation strategies are being employed? How do differences in local environments in which firms operate lead to a diversity of innovation patterns? WP 2: Innovation, competitiveness and the dynamics of market structure Work package 2 explores the impact of innovation upon firm growth, the ingredients of the competitive process, the entry and exit processes and their relationship with the dynamics of market structure. It attempts to gain in-depth insights into the driving forces of business innovation and the micro-foundations of competitiveness and growth in a cross-section of European countries. WP 3: Firms and European job and productivity dynamics This work package concentrates on the impact of innovation dynamics and technology diffusion upon processes of job creation and job destruction. Like in the other work packages the emphasis is on differences across sectors and regions in this regard and the impact of policy instruments and institutions. Apart from arriving at a ‘European map of job flows’ we shall analyse topics such as the impact of innovation upon skills demand, on wage structures (including managerial salaries), the relationship between innovation and distributional (rent and wage) dynamics. WP 4: Business environment and regional dynamics The focus here is on the geographic/locational dimension of enterprise activity. The analysis will use in the first instance microeconomic data on firms and establishments at the regional level investigating the varying degrees to which knowledge is used and exploited at the regional level and how this influences regional performance. This research segment will explicitly deal with high-technology clusters and analyse how the institutional and policy set-up matters. WP 5: Internationalisation of corporate activity and competitiveness of the European economy Work package 5 examines the role of internationalization - through its different organizational forms (exports, FDI, outsourcing) - for enterprise performance, knowledge spillovers and catching-up processes. The analysis will include theoretical and empirical research, looking at the impact of internationalization on company, industry and regional performance in the more advanced economies and in the new member states. WP 6: Policies supporting competitiveness and job-rich growth in Europe The aim of WP 6 is to extract and synthesise policy conclusions from the other work packages and to address in particular the issue of policy coordination: Which type of coordination of policy instruments would be required to achieve the best results? What are the trade-offs between equity and efficiency? How important are the cross-country differences in the institutional set-up and what policy lessons can be drawn from this divergent pattern across European countries? This integrative effort will help to achieve a broad European policy perspective on these issues. WP 7: Methods and Data WP 7 faces the particular challenge of working out a coherent research methodology that ensures the comparability and consistency of research results across countries, industries and/or regions. It is furthermore supposed to coordinate the processes of data harmonization, the setting up of joint data banks and providing a means to train and advance research methodology across all the Work packages.

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