•Microentrepreneurs in rural China devise self–serving entrepreneurship clusters to tackle resource scarcity.•Their weak institutional contexts induce a mindset of conformity with culture, norms, and business ideologies.•Their self–serving clusters are based on self–organised small–scale acts of reciprocity, solidarity, and camaraderie.•Entrepreneurship policies for social change are needed to build economically and socially equal Chinese neighbourhoods. Research overemphasises the facilitative role of institutions in cluster formation. It overlooks the collective actions by microentrepreneurs when confronting issues of microentrepreneurship in a weak institutional environment. Drawing from a social embeddedness perspective in entrepreneurship, we analyse the mechanisms underlying their methods of self-organisation for collective action, particularly in cluster formation. Interviews involving 19 microentrepreneurs in rural China revealed that they self-organised to form self-serving clusters by engaging in small-scale entrepreneurial acts of reciprocal and cooperative behaviours, solidarity, camaraderie, and by adopting Chinese business ideologies. Such an understanding contributes to research on clusters, as it reveals ways in which microentrepreneurs in a weak institutional environment leverage localised economic, social, and cultural forces to collectively form self-serving clusters. This foregrounds the role of microentrepreneurs in establishing a socioeconomic equilibrium in such an environment and it holds social, academic, and policy implications.