Purpose: The paper has been developed from a critical review of available literature drawn from the micro firm, managerial capability and innovation management fields. The paper aims to address these issues. Design/methodology/approach: The paper has been developed from a critical review of available literature drawn from the micro firm, managerial capability and innovation management fields. Findings: Four criteria of micro firm managerial capability emerge from micro firm managerial traits in the literature namely, leadership; strategic thinking; problem solving and people relationships. The review also shows that micro firms are embedded in three resource pools which include stakeholder ties; the local community and the proximate market environment. Micro firm managerial capability is argued to emerge from the interaction of the managerial capability criteria and the resources in a process mediated by the resource based and dynamic capabilities perspectives from the strategic management literature. Research limitations/implications: A gap in the academic literature is identified and the proposed theoretical model is presented to address this deficiency in the literature. Future empirical research is recommended. Practical implications: This proposed model will allow practitioners to better conceptualise and design programmes that will assist companies in developing managerial capabilities to innovate. Deep links between hotel industry practitioners and the academic community will enable the effective dissemination of the research. Originality/value: Hotel micro firms play an important social and economic role. There has been little research into how they innovate and specifically into managerial capability for innovation in context. The present research uses conceptual research to map the field and identify critical avenues for future research.