Family firms often rely on resources such as long-term orientation, trust, patient capital, ownership commitment and accumulated knowledge, yet these resources may generate rigidity, risk aversion and resistance to renewal. This paper examines how this paradox is shaped by family councils, understood as governance forums operating at the boundary of family, ownership and business. While family governance, dynamic capabilities and family firm performance have each received scholarly attention, their interrelationship remains underdeveloped. In particular, little is known about how family council characteristics and functioning influence the development of dynamic capabilities and condition their translation into company performance.
The paper develops a review-based conceptual model through a structured integrative literature synthesis. It connects three literature streams: family council and family governance research, dynamic capabilities research in family firms, and studies on family firm performance. Rather than presenting a systematic review, the study uses these streams to build a causal conceptual model of the family council–dynamic capabilities–company performance relationship.
The model proposes that family council characteristics and functioning influence the development of sensing, seizing and transforming capabilities. This relationship may be mediated or moderated by variables such as socioemotional wealth balancing, family social capital, intergenerational knowledge transfer, legitimacy creation, conflict processing and ambidextrous governance. Second, the model argues that family councils moderate the relationship between dynamic capabilities and company performance by shaping whether adaptive capabilities receive family support, ownership legitimacy and resource commitment. Third, the model includes recursive feedback loops: dynamic capabilities and performance outcomes may reshape the characteristics, legitimacy and functioning of the family council over time.
The paper contributes by positioning the family council not merely as a communication body, but as a governance infrastructure for firm-level adaptation. It also identifies future research directions on the family council–dynamic capabilities link, the dynamic capabilities–performance black box, contextual conditions and feedback processes.