Different encoding of latex and bibtex files
Does LaTeX handle situation when a .bib file has different encoding than .tex file? For instance, .tex is in ISO-8859-2 and .bib in UTF-8. Can the encoding be converted on the fly by LaTeX? Or the only way is to do is manually?
Answer
First of all, according to the LyX wiki BibTeX can't use UTF-8:
BibTeX does not support files encoded in UTF-8 (i.e., Unicode), which is nowadays the default file encoding on most OSes. The reason is that current BibTeX (v. 0.99c) was released in 1988 and thus predates the advent of unicode. Unless the long-announced BibTeX v. 1.0 or one of the many planned potential successing applications are ready, latin1 (ISO-8859-1) or another 8-bit encoding has to be used for the bib file (this does not affect the LaTeX encoding, which still can be utf8).
Usually, whatever is inside a BibTeX file gets copied verbatim to the LaTeX source code (with some formatting maybe and case changings, &c.), such as book titles, authors, &c.
So your BibTeX file encoding has to match the one used by your LaTeX file, otherwise things get funny. You also can't use babel-provided commands in BibTeX (such as "a for ä, provided by n?german) unless your document includes the right packages.
The canonical way is to make BibTeX files agnostic of any encoding or package issues by always specifying special characters with their appropriate commands.
This basically means that instead of writing ä you would have to use {\" a} if you want to be absolutely sure that it works. Seems to be fairly standard practice.
The BibTeX manual BibTeXing by Oren Patashnik also details this:
BibTeX now handles accented characters. For example if you have an entry with the two fields
author = "Kurt G{\"o}del", year = 1931,and if you're using the alpha bibliography style, then BibTeX will construct the label
[Göd31]for this entry, which is what you'd want. To get this feature to work you must place the entire accented character in braces; in this case either{\"o}or{\"{o}}will do. Furthermore these braces must not themselves be enclosed in braces (other than the ones that might delimit the entire field or the entire entry); and there must be a backslash as the very first character inside the braces. Thus neither{G{\"{o}}del}nor{G\"{o}del}will work for this example. This feature handles all the accented characters and all but the nonbackslashed foreign symbols found in Tables 3.1 and 3.2 of the LaTeX book. This feature behaves similarly for "accents" you might define; we'll see an example shortly. For the purposes of counting letters in labels, BibTeX considers everything contained inside the braces as a single letter.