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The diseconomies of scale found in smallholders’ agricultural production is a common problem faced by global agricultural development. Notable examples of regions in which this occurs include Central and Eastern Europe, India, Brazil, and China. Smallholders usually differ in their demands for socialized agricultural services due to scattered farmland, various soil conditions, different selections of crop varieties, and diverse farming arrangements. Such differences make it difficult for smallholders to cooperate on farmland scale management, resulting in a collective action dilemma. Based on the Institutional Analysis and Development framework, this paper provides insights into the influencing factors and effects of smallholders’ utilization of socialized agricultural services and constructs a cooperative mechanism for the purpose of solving the collective action dilemma in rural areas of China. We found that household characteristics, biophysical conditions, attributes of community, and rules-in-use jointly generate the action situation in the process of smallholders’ cooperative utilization of agricultural socialized services. Among them, the rules-in-use not only have a direct impact on the action situation but also regulate the role of the other three sets of factors. Various factors and mechanisms affecting the cooperative utilization of socialized agricultural services by smallholders interact in the action arena and finally form relevant outcomes that can deal with the diseconomies of farmland fragmentation. These outcomes will be fed back to each external variable again along the feedback path, so as to promote the system and create a virtuous circle. This study provides a theoretical contribution to understanding smallholders’ cooperation in the process of agricultural large-scale operation, especially in regions and countries with a large number of smallholders.

What Drives Smallholders to Utilize Socialized Agricultural Services for Farmland Scale Management? Insights from the Perspective of Collective Action