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The speed of change in competitive environments has prompted firms to develop processes directed at enabling organizational adaptation. This is captured by the concept of dynamic capabilities. We focus on a particular form of business organization, that is, the family firm. Specifically, we argue that knowledge integration—a dynamic capability through which family members' specialized knowledge is recombined—guides the evolution of capabilities. We present a general framework illustrating factors that affect knowledge integration in family firms. We conclude that only those family firms that are able to effectively integrate individual family members' specialized knowledge will be successful in dynamic markets by changing their capabilities over time.

Our purpose is to challenge the dominant meaning of professional management in family business research and to suggest an extended understanding of the concept. Based on a review of selected literature on professional management and with insights from cultural theory and symbolic interactionism, we draw on interpretive case research to argue that professional family business management rests on two competencies, formal and cultural, of which only the former is explicitly recognized in current family business literature. We elaborate on the meanings and implications of cultural competence and argue that without it a CEO of a family business is likely to work less effectively, no matter how good the formal qualifications and irrespective of family membership.

A major challenge facing the family firm is the succession process. One reason for this challenge might involve the successor's ability to acquire the predecessor's key knowledge and skills adequately to maintain and improve the organizational performance of the firm. This paper uses two theoretical approaches from the strategic management field to explore this critical process and analyze how it can be managed effectively: the resource-based theory of the firm and the emergent knowledge-based view. This conceptual framework provides a powerful tool for understanding the nature and transfer of knowledge within the family business, which becomes the basis for developing competitive advantage over nonfamily businesses.