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Institutions of Higher Learning (IHL) in Malaysia are recognized as the core of innovation development. Innovation is crucial for societal progress, yet fostering innovative work behavior (IWB) among academics remains challenging. This study introduces a framework exploring the effects of psychological empowerment and knowledge sharing on IWB, mediated by individual innovation capabilities (IIC). Grounded in Self-Determination and Social Cognitive Theories, the framework addresses gaps in understanding academic innovation. Supporting SDG 4 (Quality Education) and SDG 9 (Industry, Innovation, and Infrastructure), and aligned with the Malaysia Education Blueprint (2015–2025), it provides actionable strategies for higher education institutions to cultivate innovation. This framework benefits individuals, institutions, and society, advancing national development through sustainable academic and societal innovations.