Abstract: Qualitative research methodology is used in this study, such as participant observation and in-depth interview. Based on reviewing the progress of tourism development in Xidi village, it has been found that entrepreneurship and tourism demands are the critical internal and external factors in the development of the small tourism firms (STFs), and both factors have exerted great influence on the governance model. Three stages of governance model have been identified by the intervention degree of government, community and the third sector (e.g., Heritage Protection Organizations). The three stages are the community governance model with spontaneous community participation, the network governance model featuring the joint controls by government, community and the third sector, and the hierarchy governance model with government's constantly strengthening commands and controls. Along with the changes in governance model, government's commands and controls have been strengthened continuously, while government's interest demands led to structural changes in the tourism markets, which caused the changes in the operating characteristics and spatial structure of the STFs. Meanwhile, the entrepreneurship and imitative innovation capacity of the residents have been influenced, hence the development pace and scale of the STFs presented different features in different stages. As indicated by the research findings, the optimization of governance model is the key point to the sustainable development of the STFs.

Key words: small tourism firm, tourism governance, driving mechanism, Xidi village