Instrument variable test.

In recent years, businessmen-driven village governance (BVG) has become increasingly common in rural grassroots governance in China, though its feasibility and impact remain subjects of academic debate. Using micro-survey data collected in 15 provinces from 2021 to 2023 in China, our study examines the effect of BVG on the rural collective economy. Results show that BVG significantly increases rural collective income, with village secretaries who were former business owners exerting a greater positive effect than those with only self-employed experience. Mechanism analysis reveals that government project-based support and rural entrepreneurship activity partially mediate this effect. Moreover, clan network, as an informal institution, does not significantly moderate the effect of BVG on rural collective income, whereas the formal democratic consultation system exhibits a significantly negative moderating effect. Further analysis shows that village secretaries with self-employment experience do not significantly affect farmers’ trust in village cadres, whereas those with business owner backgrounds significantly enhance such trust. This suggests that BVG does not necessarily provoke a trust crisis and may instead help strengthen grassroots trust. Our study provides a theoretical and empirical discussion of the advantages and limitations of BVG, envisioned to provide insights for village cadres selection and governance optimization.