The notion of social capital or embeddedness has received increased attention in the field of supply chain management. However, although embeddedness has both a structural and a relational aspect, the structural has received more focus. In addition, circumstances that may affect the development of social capital, and the role and import of a focal firm's supply management function on aspects of social capital, remain unclear. This study draws on the social network perspective to explore factors associated with the relational embeddedness of social capital, and investigate the role of supply management on the process. Using empirical data collected from 204 U.S. manufacturing firms, an empirical framework is proposed and tested using structural equation modeling. The results of this study suggest a mechanism through which social capital affects firm performance, and indicate that the supply management function may contribute to sustainable competitive advantage. The study confirms that the relational embeddedness aspect of social capital should be treated as a critical antecedent to performance. It also highlights the potential role of the supply management function in developing social capital in dyadic network interactions.