This paper challenges the conventional wisdom that assumes widespread shirking and inefficiency in agricultural production under the collective system in Maoist China, and attributes these problems to egalitarianism in labour remuneration and difficulties in labour supervision. Drawing on interviews with 131 former production team members from 16 provinces, this paper re‐examines the issue of work incentives by placing it in a historical and social context in which formal institutions, such as the different forms of collective organization, income distribution and state extraction, as well as informal institutions, such as indigenous social networks, communal norms and collective sanction, interacted with non‐institutional factors, especially local geographical, demographic and ecological conditions, to constrain and motivate Chinese villagers participating in collective production. The complexity and fluidity of this context gave rise to a multiplicity of patterns of peasant behaviour in team farming, which accounts for the contrasting performances of rural collectives in different areas and periods.