This study investigates whether a firm’s social capital, which is a societal-level external monitoring, has an impact on operational efficiency. We employ multiple proxies for social capital at the state level based on Putnam (2000): (i) Putnam Social Capital Index, (ii) Putnam honesty, and (iii) Putnam trust. We use data envelopment analysis (DEA) to measure operational efficiency. Using a large sample of US firms from 1996 to 2021, this paper finds that a firm’s operational efficiency is positively associated with the level of social capital in the state in which its headquarter is located. This positive association is more pronounced when the firm-level external monitoring effect of auditors on firms is done by Big-N. An instrumental variable approach is used to mitigate endogeneity concerns, and consistent results are found. Robustness test results are also consistent with the baseline results.