Family owned tourism businesses in Small Island Developing States (SIDS) balance cultural preservation, environmental stewardship, and innovation. On Mahé, Seychelles, the entrepreneurial realities regarding finance, skills, succession, and ecosystem support remain unsynthised. This PRISMA-aligned systematic review shows that innovation adoption in Mahé's family tourism enterprises is mediated by intergenerational knowledge transfer and constrained by ecosystem fragmentation, a relationship that has not been previously synthesized in the literature on SIDS. Integrating Innovation Diffusion, Sustainable Tourism, and Entrepreneurial Ecosystem frameworks, the review finds that succession planning aligned with family values and policy frameworks coordinating finance, capacity building, and ecosystem support are necessary to sustain revenue and heritage. Using Scopus, Web of Science, and Google Scholar, studies were appraised against the inclusion criteria. The findings confirm that family culture underpins experiences and that intergenerational transfer mediates innovation adoption, although geographic isolation and market size limit supply chains. Innovation, primarily in digital marketing and sustainability, remains uneven owing to financial and capacity bottlenecks. Most studies report that financing constraints affect over half of SIDS tourism businesses, while less than half indicate strong managerial competence. Although intergenerational transfer supports continuity, succession planning challenges in 40% of studies threaten modernization. External shocks, such as COVID-19, caused revenue declines exceeding 50%, forcing pivots toward domestic and virtual offerings, despite fragmented policy support.