What factors led to the formation of the canon (i.e. a specific version of literature) as the correct one?

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The notion of the canon has a religious background. It is based on an authoritative list of works that forms the basis for judgement of all other works. The concept is based on the books of the bible that were officially recognized by the church and hence formed the foundation of the church's beliefs.  While I am not familiar with the formation of the canon outside the West, the Western Canon of literary works began to be compiled with the rise of the university and you can find the compilations of lists of required readings in the curriculum of Harvard University very early on. The American university system is in turn based on the humanist ideal of the German education system that preceded it ( the German came before the American system, that is). The German humanist ideal stipulates that a nation is a cultural and linguistic unity and in order to promote this unity it is necessary to read works that speak to this. The philosopher who promoted this idea vitally was Johann Gottfried Herder.

This quote from Victorian web makes the importance of the canon clear:

[T]he canonical work acts as a center -- the center of the perceptual field, the center of values, the center of interest, the center, in short, of a web of meaningful interrelations...

But the canon is certainly not without problems, as we know today. It excludes minority voices to a large degree. For more on the formation, history and problems, check out the link I pasted below.

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