Entrepreneurship and the formation mechanism of Taobao Villages: Implications for sustainable development in rural areas

With the progress of information and communication technologies (ICT) and advent of the knowledge economy, the burgeoning e-commerce heralds new opportunities to reverse the declining trend of the rural economy. In the past two decades, the emergence of Taobao Villages in rural China has exemplified the significant outcomes of e -commerce in changing rural communities. Despite fruitful research on rural e-commerce, the formation mech-anism of Taobao Villages has not been explained in detail. This study fills this gap by investigating the devel-opment progress of a typical Taobao Village in-depth. Drawing on the framework of neo-endogenous rural development, we conducted a case study in Dongfeng Village, one of the first three Taobao Villages in China, to identify the development path and formation mechanism of typical Taobao Villages. We found that the pros-perity of e-commerce in Dongfeng Village could be attributed to the combination of the bottom-up initiative of farmers and top-down intervention by the government. Initially, pioneer entrepreneurs brought e-commerce to the village and achieved great success in this business, then social network acted as a channel for the diffusion of e-commerce in the local community. Subsequently, the government recognized the significance of e-commerce for the rural economy and provided support to advance the further development of rural e-commerce. With the help of the government, a developed e-commerce ecosystem emerged in the rural community and brought changes to the village in terms of the industrial structure, farmers' livelihoods, and rural landscapes. Based on the case study, we concluded that farmers' entrepreneurship, local participation, and adequate government inter-vention were important to rural development. The cultivation of rural elites, leadership building, and partici-pative governance should be considered in the rural policy design.