The challenges faced by family-owned small and medium enterprises (SMEs) have clearly seen in an increasingly global economy. It is acknowledged that family SMEs constitute a large segment of all companies in the Malaysian corporate sector. Malaysia’s economic development is therefore largely dependent on the entrepreneurial capacity of family firms in an increasingly global marketplace. This conceptual framework analytically and empirically reviews family SMEs to understand the core issues surrounding the growth of such enterprises. The primary focus of this article is the development of tacit knowledge through innovation among family SMEs following one or more generational changes, with specific attention given top industries as comparative longitudinal case studies. Besides, this article appraises the impact of generational change by tracing the changes that occur when new generation of family business owners attempt to build on the tacit knowledge of the founders by expanding the range and quality of the products.

Keywords: Conceptual Framework, Family Business, Generational Change, Innovation,  Development.