This paper investigates the role of the higher education system (HES) in the production of national innovation. We focus on the issue of institutional diversity of HESs and its impact on national innovation systems. We identify four key HES characteristics and hypothesize their influence on the production of national innovation. The empirical evidence presented in this paper suggests several conclusions which have relevance for policy makers. In particular, there should be focus upon increasing access to and investment in higher education and lowering subsidies. The latter is found to have an adverse effect on patent production.