THE STAGES OF TRANSFERRING KNOWLEDGE IN SMALL FAMILY BUSINESS SUCCESSIONS Elina Varamäki University of Vaasa, Department of Management and Organization P.O.Box 151, FIN-60100 Seinäjoki, Finland Tel. +358-50 560 3727 Fax. +358-20-1245 434 e-mail: elina.varamaki@uwasa.fi Timo Pihkala Lappeenranta University of Technology, Lahti Unit Saimaankatu 11, FIN-15140 Lahti, Finland Tel. +358-3-8769130 Fax. +358-3-8769133 e-mail: timo.pihkala@lut.fi Vesa Routamaa University of Vaasa, Department of Management and Organization P.O. Box 700, FIN-65101 Vaasa Tel. +358-6-3248 246 Fax. +358-6-3248 195 e-mail: vesa.routamaa@uwasa.fi Abstract The present paper seeks to build understanding of family business succession by focusing on knowledge transfer between the older generation and the younger generation. Following the literature on resources, competences and knowledge management, we suggest that the introduction of the second generation in a family business involves the transfer of both explicit and intrinsic knowledge, i.e. tacit knowledge. An interesting question is: what are the routes to acquire these different types of knowledge and what role does single-loop and double-loop learning have in family business succession? The present paper is explorative based on a qualitative case study. Empirical evidence shows how difficult it is to depict the moment when a succession process has been completed. More than that, the central issues in succession, i.e. the transfer of knowledge, capabilities, responsibility and power, are linked to each other in a sequential manner, thus bringing out the process of learning. The stages of transferring knowledge can be divided into i. getting to know the field (growing into entrepreneurship), ii. familiarization (actual stage of transferring knowledge), and iii. the stage of the independent development of the business (creating new explicit and tacit knowledge). Key Words: Family business, succession, knowledge transfer, small and medium -sized enterprise