This study aims at furthering this discussion by empirically examining on how the firm’s knowledge-base (i.e. intellectual capital) and the abilities to utilize and develop it (i.e. knowledge management) are associated with firm performance outcomes. In particular, the purpose is to examine firms with different profiles concerning their overall levels of IC and the KM practices, and whether there are differences between firms with those profiles in terms of innovation and market performance. Data for this study was collected via a survey from 259 Finnish firms with over 100 employees. Based on median split regarding the utilization of KM practices and the possession of overall IC, the firms were distributed into four profiles characterized with (1.) high IC and low KM practices, (2.) high IC and high KM practices, (3.) low IC and low KM practices, and (4.) low IC and high KM practices. Then, analysis of variance (ANOVA) was conducted to evaluate the statistical differences between the four different IC/KM profiles of firm to the innovation and market performance of the firm. Regarding innovation performance of the firm, this study finds that firms characterized with high amount of IC and high utilization of KM practices (profile 2.) are typically more innovative than the firms that possess low overall amount of IC (blocks 3. and 4.). Also, this study points out that the firms with high overall IC and low utilization of KM practices statistically beat the firms with low overall IC and low KM practices in terms of innovation performance. These finding indicate that both possession of sufficient levels of IC and the active utilization and development of it are required to increase the competitiveness of the firm. The extant literature on KM and IC have provided us with the basic understanding on how the knowledge resources and the practices or processes to manage them are associated with firm performance outcomes. However, our paper is among the first attempts to merge the IC and KM disciplines to find out which configurations could yield organizational benefits in terms of innovation and market performance outcomes. In sum, this study points out that while the level of IC alone could predict the innovation potential of the firm, the organizational and managerial practices to leverage the IC are needed to transform the knowledge potential into market performance. This results is interesting for knowledge and innovation management research and practice, since it shows the merits of letting innovation flourish also without a high level of managerial control, while pinpointing the increasing relevance of knowledge management when actual market performance is in question.