Knowledge Creation in Family Businesses and Its Importance for Building and Sustaining Competitive Advantage during and after Succession

Abstract

The family business’s tacit knowledge, embedded in its founder, and its transmission is found to be important for building and sustaining competitive advantage since this type of knowledge is difficult to trade and imitate, scarce, appropriable and specialized. The purpose of our research was to broadening our understanding of family businesses tacit knowledge and its creation during the succession process by applying the concept of knowledge creation through so called SECI process. The case study-based findings showed that founders and successors find mentoring, internal/individual training, and involving in the meetings with business partners as the most used knowledge creating activities. We suggest that tacit knowledge creation during succession should be placed in broader context of organizational knowledge creation in order to raise the total quality of successor’s knowledge and adding new knowledge thus contributing to building family business’s competitive advantage.