Abstract
Abstract There has been an extensive amount of research devoted to innovative activity in universities, and not much research is done on the factors of higher education influencing the innovative activity of enterprises. In this regard, the authors of this study have decided to fill this gap, and they trust that scholars and policymakers would consider their work to be of considerable significance for understanding the interconnection between higher education and innovation performance. This research aims to evaluate the effect of the major higher education institutional factors on the innovative activity of enterprises in the country and to illustrate how these factors are of long-run importance in realizing sustainable economic growth. The factors examined for 2003–2023 include level of innovation activity (in %), R&D expenditure (% of GDP), government expenditure on education, total (% of GDP), graduation of doctoral students, number of higher education institutions, and graduation of university students. Our econometric model is the autoregressive distributed lag (ARDL) model. The model was validated/tested by the augmented Dickey–Fuller (ADF) unit root test, Granger causality test, co-integration test, and stability tests, which are useful for model validation and robustness. Our results suggest that research and development spending and government spending on education generate short-term positive effects and long-run negative ones. On the contrary, the larger count of higher education institutions, doctoral graduates, and overall university graduates has detrimental short-run but advantageous long-run ramifications. The results can support important policy considerations for the promotion of innovation-based higher education systems and the enhancement of national innovation performance.