Abstract

Purpose: Artificial intelligence (AI) applications enable entrepreneurs in small and medium-sized enterprises (SMEs) to make strategic decisions based on more accurate predictions and modeling scenarios to achieve operational efficiency and profitability. This research aims to investigate the role of AI applications in enhancing strategic decision-making (SDM) through the mediating role of digital leadership (DL). Design/methodology/approach: The sample included 306 Omani entrepreneurs from SMEs randomly sampled to collect data from different SME industrial incubators. To test hypotheses, structural equation modeling (SEM), regression and confirmatory factor analysis and Process V4 to test the mediating role of DL were used. Findings: Results reveal that AI applications have a positive and significant impact on SDM and DL. Furthermore, DL has a positive and significant impact on SDM. The results also reveal that DL enhances the relationship between AI applications and SDM in Omani SMEs. Originality/value: This research provides evidence regarding SMEs in the Arabian context and the ability of AI application adoption to improve productivity and sustainability in the economic sector. © 2025, Emerald Publishing Limited.