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Social capital is defined as the networks, norms and trust which constitute the resources required for individuals, workplaces, groups, organisations and communities to strive for sustainable futures in a changing socio-economic environment. This paper is an Australian pilot study whose purpose is to derive tentative indicators of social capital through a grounded theory approach, which in turn allows for subsequent refinement and testing. The study consists of an intensively analysed whole-community case study. The assumptions and issues considered in the project’s development are explained, and the matter of definition, literature and possible uses of social capital are also discussed. The complex conceptual, definitional and methodological matters for the project are operationalised through the research question which is: ‘What is the nature of the interactive productivity between the local networks in a community?’ Through answering this question, the research begins to address an area for inquiry which is both under-researched and in which there is a great deal of uncertainty.