As private businesses are an integral part of China’s market economy, it is essential to foster their expansion in a positive manner. Even though some private enterprises have made significant strides in their ability to innovate independently, the majority of them have not yet established an effective endogenous mechanism of independent innovation, and their independent innovation capability and level are insufficient to meet the requirements of economic and social development in the new era. Therefore, it is essential to evaluate the innovation capacity of private businesses. Therefore, the first section of this paper examines the research on measuring enterprise productivity. Second, this paper employs a combination of endogenous dynamics to develop an endogenous dynamics mechanism that encourages innovation in private companies. In addition to employing the DEA model, this paper proposes an evaluation optimization mechanism for assessing the innovation capability of private enterprises in a Chinese province from 2015 to 2021. It concludes that the innovation capability of private enterprises in this province is generally low and that factors such as the number of technical employees, the R&D investment funds of private enterprises, and the number of granted patents have a significant impact.