Business environment plays a pivotal role in fostering private enterprise innovation, yet prior research has often neglected the intricate and synergistic interactions among its constituent elements. This study addresses this theoretical gap through the application of Necessary Condition Analysis (NCA) and Qualitative Comparative Analysis (QCA) to investigate the multidimensional configurations enhancing private enterprise innovation. The NCA results identified the market environment as a necessary yet insufficient condition when considered in isolation. The QCA modeling further reveals three distinct synergistic pathways leading to high levels of innovation, which are consistently centered on a core combination of the governance environment, market environment, and technological investment. This study provides targeted policy implications for optimizing business environment configurations that foster robust innovation ecosystems.