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The purpose of this study is to develop a systematic understanding of the mechanisms by which high performance work systems (HPWS) facilitate organizational innovative capabilities. Using knowledge based view of the firm, we introduce the important role of intellectual capital in examining that issue. Drawing on empirical analysis conducted at 164 Chinese firms, the results confirm that HPWS influence organizational innovative capability through different dimensions of intellectual capital (human, organizational and relational capital). We find that organizational capital and relational capital mediates the relationship between HPWS and innovative capabilities. Contrary to the hypothesis, human capital doesn't play a mediating role in that relationship. Our findings support, as well as extend the strategic human resource management (SHRM) literature and resource based view (RBV) of the firm as whether, why and how HPWS can develop a competitive advantage based on innovation.