State-driven social innovation: Can neo-exogenous development address rural marginalization? A tale of two villages in China

China's Rural Revitalization, while a national policy, has recently been conceptualized as neo-exogenous development — a state-led, networked development model that integrates steered endogenous features. Distinct from the bottom-up neo-endogenous development models prominent in Western contexts, this approach represents a state-driven radical social innovation process with the potential to address structural rural challenges. This study explores whether the neo-exogenous model can effectively mitigate institutionalized rural marginalization in China. Drawing on two neighbouring villages in Sichuan, Lanjing and Qianjiachi, this study engages Neumeier's three-step model of social innovation (problematization, expression of interest, and delineation and coordination) to analyse how state-led initiatives interact with different forms of social capital (linking, bonding and bridging). While both villages have experienced betterment under the Rural Revitalization Strategy, their trajectories differ markedly. In Lanjing, state-driven development prioritized infrastructure and demonstration effects, but the village remained highly dependent on external actors, with limited inclusion of villagers in economic gains. In contrast, Qianjiachi, through the rebuilding of bonding social capital and village leadership, leveraged its political capital to forge collaborative partnerships with local governments, resulting in more adaptive and inclusive governance arrangements. Our analysis highlights how state-driven social innovation can regenerate all forms of social capital, if sequenced effectively. This study contributes to rural development theory by situating China's state-driven model within global debates and clarifying how actor configurations shape innovation outcomes. It also offers insights for Global South contexts where community-led strategies remain constrained by weak institutional capacity and fragmented local governance. • Conceptualizes China's Rural Revitalization as state-driven social innovation. • Compares two village cases under the neo-exogenous development framework. • Reveals the role of bonding social capital in shaping inclusive rural outcomes. • Shows how local-state alliances can adapt top-down central policy to local needs. • Warns of risks from overreliance on state's political and fiscal injections.