This report addresses small and medium-sized enterprises' (SMEs') role in the changing international division of labor and trade in information service activities. Chapter 2 describes the EMERGENCE project to map and measure eWork. Chapter 3 reviews literature that shows SMEs account for the overwhelming majority of companies and make a crucial contribution to total employment and highlights their strengths and weaknesses. Chapter 4 derives 10 hypotheses about SMEs in the new economy and trade in information activities. Chapter 5 describes the large-scale survey of employers in 15 European Union countries and 3 accession states to provide empirical data. Chapter 6 on eWork and demand for information activities reports that establishment size has a significant impact on frequency of observing eWork; eOutsourcing is the most popular form of eWork; and, in the knowledge sector, size does not significantly impact on frequency of practicing eWork. Chapter 7 reports on the supply side of eWork, including that SMEs in the knowledge sector are more important suppliers of telemediated services than large enterprises, and small ones are more often chosen due to expertise and cost advantages. Using bivariate and logistic regression analyses, Chapter 8 shows that the impact of establishment size on eWork and eSupply is subordinate to the impact of sector and country. Chapter 9 presents illustrative case study fragments. Chapter 10 makes conclusions about threats and opportunities for SMEs in the new economy. Appendixes include data tables and figures and an 57-item bibliography. (YLB)