This study aims to understand the reality of Village-Owned Enterprises and their implications for rural communities. The focus of this research is to explore the role of Village-Owned Enterprises in carrying out their role as an engine for driving the economy of people in rural areas. Village-owned enterprises have turned into competitors for small rural enterprises. This research uses a qualitative approach, and the informants from Village-Owned Enterprises are the Chairman, Secretary, and Treasurer. Village-owned enterprises become a medium for rural business groups to develop economic potential. The results of the study indicate that the business fields that village-owned enterprises develop have in common with small businesses of rural communities, so it interferes with the sustainability of local communities' businesses. The development of Village-Owned Enterprises is based on building a business chain by involving local economic groups so that the sustainability of community economic business activities impacts the economy of rural areas. Practical implications — Provide academic considerations for regulators to evaluate and reorganize the role of Village-Owned Enterprises for the sustainability of small rural businesses.