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Territorial capital is more than economy, business and socioeconomic status of residents. It is also the way residents of localities form social networks and how these are intertwined with the local political, institutional and administrative configurations. Sampson (2011) argues that while social networks foster the conditions under which collective efficacy may flourish, they are not sufficient for the exercise of social cohesion and social control. Networks have to be activated to be meaningful. Interaction is embedded in local traditions and social order is produced locally. Analysing interviews from a rural location in Denmark, we examine how referential features of group life (spatial areas, relations, shared pasts) generate action. We develop the concept of 'governance efficacy' to denote the capacity to mobilise collective efficacy in relation to territorial development. We argue that such a concept is an important element in explaining why and how a peripheral location is able to manage social challenges despite population decline. [ABSTRACT FROM AUTHOR]