Empowering MSMEs in Community Based Tourism: A Conceptual Review of Internal and External Capabilities

Community Based Tourism (CBT) has emerged as a sustainable development strategy that empowers local communities through participatory tourism activities. Micro, Small and Medium Enterprises (MSMEs) play a pivotal role in facilitating inclusive economic growth and enhancing community ownership of tourism initiatives. However, the full potential of MSMEs in sustaining CBT remains underexplored, particularly in rural settings where infrastructural, digital and institutional challenges persist. This conceptual paper reviews and synthesizes existing literature to examine the internal and external capabilities that influence the effectiveness of MSMEs in CBT. Drawing on three theoretical lenses, namely the Sustainable Livelihood Framework (SLF), Community Empowerment Theory (CET) and the Resource Based View (RBV). This paper proposes a holistic conceptual model for strengthening MSMEs in CBT contexts. Key themes include digital readiness, innovation capacity, social capital, strategic leadership and supportive policy environments. This paper offers practical insights for policymakers and community planners seeking to optimize the role of MSMEs in fostering sustainable tourism.