The purpose of this report is to describe the methodology used to develop a comprehensive dataset, denominated INNOREG, which provides information on several potential drivers and barriers to firms’ innovation activity. All the examined drivers and barriers depend, in a more or less direct way, upon the decisions taken by national policy makers. By merging INNOREG with data on ICT use, innovation, productivity and employment it will be possible to investigate the effect of several policies (mainly concerning labour market and taxation) and of the efficiency of bureaucracy on measures of economic performance such as production, employment, innovation etc.. The data are of three main types: 1. reforms of labour market regulation, computed using the EU Commission LABREF database, and which gives us information on the direction and intensity of reforms affecting the labour markets of 27 EU countries from 2000 to 2012 (LABREF_DRF.DTA); 2. generosity of the tax treatment for R&D, as measured by the B-Index over the period 1990-2013 (not all years are available) for a set of EU countries (B_INDEX.DTA); 3. indices of business regulation, as measured by various indicators taken by the Wordbank DoingBusiness project, reported annually from 2004 to 2014 for all EU countries (DOINGBUSINESS.DTA). For each of the above three topics, we developed a specific dataset (name in parenthesis). The three resulting datasets were then merged to form the comprehensive INNOREG dataset (INNOREG.dta). In this report we also provide summary statistics on the three types of data mentioned above.