Building Smart Economy: How Digitalization, Artificial Intelligence, and Innovation Are Shaping a Diversified Future

This study explores how innovation, economic diversification, and digitalization are boosting Oman’s efforts toward building a smart economy within the context of Oman’s banking and financial regulatory sector, while considering the role of artificial intelligence and governmental support. Supported by the and the Resource-Based View and Innovation Diffusion Theory, this study views innovative and digital competences as key national resources that help governments and organizations to adapt to technological variation and reinforce economic pliability. By using a quantitative approach and convenient sampling, the data were collected through a closed-ended structured questionnaire from 296 individuals representing businesses across Oman and analyzed using SmartPLS 4.0. The results demonstrate that innovation, diversification, and digitalization have a positive and significant impact on governmental support, which eventually plays a mediating role in leading the implementation of a smart economy. Although artificial intelligence was expected to strengthen the effects of digitalization and innovation, the findings reveal that its moderating role is not yet significant, suggesting an early stage of AI diffusion within the banking sector. These results not only confirm Resource-Based View and Innovation Diffusion Theory in an emerging economy but also present practical understandings for business leaders and policymakers. Furthermore, these findings underscore the importance of institutional readiness and diffusion maturity in shaping the role of advanced technologies in smart economy development. This study also suggests that incorporating AI-driven innovation, digital capability development, and strong governance can support Oman to attain the Vision 2040 goals of endorsing diversification, inclusive economic growth, and sustainability in the digital era.