Family Firms, Enterprise Development and Tacit Knowledge Transformation: Small and Medium Enterprises (SMEs) Innovation in Malaysia

Abstract

In light of the global economy, it is undeniable that small businesses such as family-owned small and medium enterprises (SMEs) affect economic performance globally. They offer a key basis of flexibility and innovation but also face some challenges along the way. Since family SMEs form a large portion in the Malaysian corporate sector, the economy of this country is highly dependent on family firms’ entrepreneurial capacity. During the past decade, although family SMEs innovation is analytically and empirically reviewed in terms of theory building, it still lacks a systematic adoption of thorough and theoretically-based frameworks to gain understanding on the evolution of knowledge transformation surrounding this topic. This study primarily focuses on the development of tacit knowledge through innovation during generational change with specific attention given to three family firms ranging from old, new and declining wealth enterprises. Besides, this article appraises the evolution of SMEs innovation when new generations attempt to transform the tacit knowledge in advancing the products innovation and quality branding in Malaysia.