This article investigates the transformation of tacit knowledge on enterprise development in family business, specifically on generational change. Different generations exhibit different characteristics that will influence organization outcome and strategy management, this motivates the current work to form a conceptual framework, which determines the factors that trigger generation change in family enterprises. First, the case study of plastic family firm examines the firm’s historical profiles that were attained from Malaysia’s companies house (SSM) to assess the organization capabilities towards enterprise development. Second, this article examines the influence of strategy management during generational change upon innovation capacity. In this case study of plastic family firm in Malaysia, this firm focuses on the firms’ ability to keep and advance their tacit knowledge, which prompted them to pick up new technology and skills to achieve innovativeness in their products and services. As the business is inherited by the later generation with a good education background, they tend to form new knowledge.
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