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The purpose of this paper is to exhibit the mediation and moderation influence of organizational motivation and organization characteristics between intellectual capital and innovation capability of the textile and apparel industry in Sri Lanka. The shift of the traditional tangible assets toward more subtle forms of intellectual capital creates a crucial factor for the achievement of innovation capability and competitive advantage. In this study area, previous works have exclusively focused on the co-alignment between intellectual capital and innovation capability as compelled to deliver competitive advantage. The random sampling technique and structured questionnaires were administrated as a research instrument to collect the data. The results demonstrated that intellectual capital has a significant positive relationship on innovation capability with mediated and moderated effects. The findings of this research will be useful for the textile and apparel industry to understand and apply intellectual capital to create innovation capability in their organizations.

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