Small-island communities in developing countries rely heavily on wild fisheries to meet the communities' food and livelihood needs. These communities' remoteness, insularity and the small size of the local economy make the fishery production sensitive to the way in which fishers interact with other community members and to local environmental changes. This paper investigates how social capital and environmental threats to local fishing activities are associated with fishery productivity using the data collected in a small-island fishing community in Indonesia. We estimate the technical efficiency and capacity utilization, and examine how these measures are related to the social capital built around the island community. The impacts of environmental changes that are perceived as threats to local fishing activities are also evaluated. We find that inefficiency in the fisheries' production is correlated with whether fishers are tied to community members outside their own fishing groups and whether they are exposed to environmental threats, the sources of which are internal and external to the fisheries system. The underutilization of existing capacity is evident for fishers who receive government aid for fishing equipment and those who perceive population growth and aquaculture development as a threat to their fishing activities.