This article analyzes the impact of the domestic environment on the relationship between a firm’s intellectual capital and its ability to innovate, emphasizing that a firm’s competitiveness depends on both the assets it possesses and the external factors that regulate its use. Two factors at the national level—the availability of skilled labor and the system of appropriation—are key features of the domestic environment that can shape how intellectual capital affects a firm’s innovativeness. The national climate combines factors (or country-level resources) and institutions that shape the ability of companies to pool resources at the firm level and extract value from them. The study aims to provide a deeper and more comprehensive understanding of how intellectual capital affects company performance, focusing on the impact of country conditions. The availability of skilled labor and the appropriation system significantly impact the relationship between intellectual capital and innovation by determining the ability to utilize and protect intellectual capital, which can stimulate or inhibit a company’s innovation processes. This study will provide additional valuable input to strategic management by examining how combinations of country-level factors and firm-level resources jointly contribute to understanding firm performance. The results show that the more favorable the country’s environment is, the less impact human and structural capital have on a company’s innovation. In contrast, relational capital retains its influence in more and less favorable conditions. This can help professionals target specific aspects of intellectual capital that have the most significant impact in their context.