This paper examines the framework of the MSMEs and the Palestinian Economy. In the Palestine economy family-run firms that prove to be the most successful. This is especially true in the food and beverage industry as well as the textile, lumber, furniture, hotel, retail and wholesale sectors. In some cases, the market share of some family firms has reached 95%. Certain family firms employ between 200 and 350 employees, while the average size of a Palestinian enterprise is only 5 employees. However, evidence illustrates that approximately one third of family run-enterprises are affected by conflict between family members. In such cases, it is not unusual for businesses to be liquidated, divided or transferred to other owners. Internal disputes are particularly common when an enterprise reaches its second or third generation of management. Inter-family dynamics are an important determinant of the life-cycle of Palestinian businesses and should not be understated.