This study examines the interconnection between family dynamics, knowledge management, and innovative capacity in a small family business. It highlights that the familial nature of these organizations influences knowledge management, primarily through communication and knowledge sharing. Thus, the methodological procedure presents itself with the adoption of a qualitative, exploratory, and descriptive approach, using the case study strategy with the interview technique, involving the participation of four interviewees in this scenario. The research shows that the family environment shapes innovative capacity, affecting flexibility in implementing new ideas. The unique dynamics of these companies, permeated by family values and a specific organizational culture, play an important role in how they handle challenges and opportunities. This study reveals the importance of specific strategies to capitalize on the strengths of family dynamics, boosting knowledge management and fostering innovation as key drivers for the competitiveness and longevity of small family businesses. Interviews with owner-managers and managers provided insights into how family dynamics influence knowledge management and innovative capacity within this specific organization.