This article considers the relevant framework for evaluating a major process innovation in mental health services, viz. community‐based service provision. Such services involve multiple inputs from various channels (or departments) in government and ‘the community’. Conventional economic theory of production is extended here to incorporate the notion that economic transactions are embedded in social relations, i.e. social capital is relevant to community‐based service provision. Another fertile concept is that of ‘co‐production’, due to Elinor Ostrom, a political scientist. Ostrom’s conception of co‐production between government and community inputs is outlined in the context of mental health services. A relevant question for evaluating this process innovation emerges from the co‐production framework: is social capital from government a substitute for, or complementary to, social capital from community sources?