Previous work on innovation performance has focused on either organization or individual-level analysis. The current study is the first that we are aware of in which multilevel theory and method were applied to innovation behavior and innovation performance. This multilevel study of 100 managers, 512 R&D teams of employees from 38 R&D companies demonstrated that both individual-and team-level factors were significantly associated with innovation behavior: Balanced psychological contract fulfillment explained within-team variance, and innovation climate explained between-team variance. Further, employee innovation behavior aggregated to the team level explained between-team variance in innovation performance. This paper also explores the impact of the RBV on the theoretical and empirical development of SHRM and innovation climate. This study is to introduce Intellectual capital as a mediating construct between knowledge human resource management (KHRM) systems and knowledge create. This study provides consistent support for the notion that KHRM systems are fundamental in the development of intellectual capital. This study also found intellectual capital to be associated with increased knowledge creation and innovation performance. With regard to intellectual capital¡¦s mediating role in the HR-performance linkage, this study provides both managers and academics with a more fine-grained analysis of how to target HR investments that build intellectual capital, which, in turn, drive team innovation performance. The results contribute to knowledge on the resource-based view of the firm and the importance of multilevel theory.