Institutions are pivotal in university governance, symbolizing stable organizational power reflective of governance capacity. The strategic organization of a university’s internal structures aims to align with its developmental goals. The effectiveness of these arrangements is evaluated by their congruence with the university’s characteristics and norms, aiming to enhance governance for growth and sustainability. Thus, the primary aim of this study is to determine whether this layout can strengthen the university’s governance ability, enhancing its prospects for survival and development. This study introduces a novel theoretical framework across the dimensions of time, space, and quantity, utilizing governance elements to assess the impact of institutional layouts on governance capabilities. Data were gathered through a self-developed survey questionnaire, with a total of 742 valid responses collected, and by employing a high-dimensional fixed-effects model, we found that the three-dimensional institutional layouts significantly impact governance capabilities, with effects varying by the institution’s affiliation. Furthermore, the mechanism analysis shows that university governance capabilities are also manifested through different configurations of governance elements under institutional layout, and are influenced by the responsiveness, collaboration, and expansion of the entire institutional system. Moreover, our analysis indicates a threshold effect in the tenure of institutional members, where both excessive and insufficient enthusiasm impact governance capabilities differently. This suggests the importance of a strategic institutional layout that aligns with the governance elements’ dynamics of timeliness, flexibility, distribution, and scarcity across time, space, and quantity. Achieving an optimal arrangement enhances the university’s governance efficiency significantly. In light of these findings, policy implications were proposed.