Innovation events-the introduction of new products or processes-represent the end of a process of knowledge sourcing and transformation. They also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business. This recursive process of knowledge sourcing, transformation and exploitation comprises the innovation value chain. Modelling the innovation value chain for a large group of manufacturing firms in Ireland and Northern Ireland highlights the drivers of innovation, productivity and firm growth. In terms of knowledge sourcing, we find strong complementarity between horizontal, forwards, backwards, public and internal knowledge sourcing activities. Each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs. In the exploitation phase, innovation in both products and processes contribute positively to company growth, with product innovation having a short-term 'disruption' effect on labour productivity. Modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills, capital investment and firms' other resources in the value creation process. Research Seminar at Durham University. We are particularly grateful for the detailed comments of Loles Añon, Paul Kattuman and three anonymous referees.

SMEs which have a track record of innovation are more likely to export, more likely to export successfully, and more likely to generate growth from exporting than non-innovating firms. What are the factors that enable such performance? This paper summarises and synthesises the evidence on SME innovation, exporting and growth, paying particular attention to internal and external (eco-system) enablers, and for the interplay between innovation and exporting in SME growth. We highlight those areas for which the evidence base is secure and where the evidence base remains limited, and develop policy suggestions and an agenda for further research.

Using comparable plant-level surveys we demonstrate significant differences between the determinants of export performance among UK and German manufacturing plants. Product innovation, however measured, has a strong effect on the probability and propensity to export in both countries. Being innovative is positively related to export probability in both countries. In the UK the scale of plants' innovation activity is also related positively to export propensity. In Germany, however, where levels of innovation intensity are higher but the proportion of sales attributable to new products is lower, there is some evidence of a negative relationship between the scale of innovation activity and export performance. Significant differences are identified between innovative and non-innovative plants, especially in their absorption of spill-over effects. Innovative UK plants are more effective in their ability to exploit spill-overs from the innovation activities of companies in the same sector. In Germany, by contrast, non-innovators are more likely to absorb regional and supply-chain spill-over effects. Co-location to other innovative firms is generally found to discourage exporting.

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We explore the causal links between service firms' knowledge investments, their innovation outputs and business growth based on a bespoke survey of around 1100 UK service businesses. We combine the activity based approach of the innovation value chain with firms' external links at each stage of the innovation process. This introduces the notion of 'encoding' relationships through which learning improves the effectiveness of firms' innovation processes. Our econometric results emphasise the importance of openness in the initial, exploratory phase of the innovation process and the significance of team working in later stages of the process. In-house design capacity is strongly linked to a firm's ability to absorb external knowledge for innovation. Business growth is related directly to both the extent of firms' service innovation as well as the diversity of innovation reflecting marketing, strategic and business process change. Links to customers are important in the exploratory stage of the innovation process, but encoding linkages with private and public research organisations are more important in developing innovation outputs.