INSTITUTIONAL MODERATORS IN AI-POWERED DIGITAL TRANSFORMATION: REGULATORY AND CULTURAL DIMENSIONS OF INNOVATIVE OPERATIONS

Artificial intelligence is shaping digital transformation, but in fragile economies like Iraq its success depends on strong institutions. This study assessed how regulation, culture, and coordination influenced innovative operations between 2020 and 2024. A descriptive and explanatory design was applied, using 105 secondary data cases from global and national sources, with correlation and regression tests validating results. Findings show digital laws rose from 2 to 8, regulatory agencies from 1 to 4, and compliance systems from 6 to 25 percent of firms. Innovation-oriented firms grew from 18 to 40 percent, trained employees from 12 to 35 percent, and public trust in digital systems from 20 to 42 percent. Inter-agency projects increased from 2 to 6, public-private partnerships from 1 to 5, and regional agreements from 1 to 3. Outcomes improved as service innovation rose to 30 percent of agencies, efficiency gains reached 22 percent, transparency rose to 27 percent, and responsiveness improved by 21 percent. Correlation results showed strong links with regulation (0.80), culture (0.74), and coordination (0.69), while constraints had a negative correlation (-0.56). Regression confirmed regulation as the strongest driver (β = 0.42), followed by culture (β = 0.30) and coordination (β = 0.25), with constraints eroding gains (β = -0.19). Overall, the model explained 83 percent of the variation in outcomes. These results imply that enforcing laws, building trust, scaling training, and improving coordination are vital for resilience and competitiveness. Recommendations stress stronger legal enforcement, cultural alignment, central AI governance, and policy stability to expand inclusive digital transformation.