From AI Decision Support to Sustainable Digital Innovation: The Mediating Role of Decision-Making Quality and the Moderating Role of Digital Leadership in Libya’s Oil and Gas Sector

The accelerating integration of artificial intelligence (AI) technologies has profoundly reshaped the decision-making environment of resource-intensive industries, yet the mechanisms through which AI-driven decision support systems (AIDSS) are associated with sustainable digital innovation (SDI) remain underexplored, particularly in emerging economy contexts. Drawing on the Dynamic Capability View and the Digital Leadership Perspective, this study develops and tests an integrated model examining the direct association of AIDSS with SDI, the mediating role of decision-making quality (DMQ), and the moderating role of digital leadership (DL) in Libya’s oil and gas sector. Survey data were collected from 326 managers and decision-makers across major oil and gas companies operating in Libya between June and August 2025 and analyzed using partial least squares structural equation modeling (PLS-SEM) via SmartPLS 4. Results indicate that AIDSS are significantly and positively associated with both SDI and DMQ, and that DMQ partially mediates the AIDSS–SDI association, identifying decision quality as the organizational mechanism through which AI capabilities translate into sustainable innovation. Furthermore, digital leadership significantly moderates the AIDSS-DMQ association, and moderated mediation analysis reveals that the indirect innovation pathway through decision quality is substantially stronger under high digital leadership conditions. These findings extend theoretical understanding of AI-enabled dynamic capabilities, establish decision-making quality as a pivotal intermediary in the AI-to-innovation pathway, and confirm that digitally competent leadership is an indispensable organizational amplifier of AI’s strategic value. Practical implications are discussed for oil and gas managers, digital leaders, and policymakers in Libya and comparable energy sector contexts.