SEM analytics show the assessment of Institutional Engagement (IE) as a mediator for the connection between Artificial Intelligence (AI) and Business Success (BS) along with Entrepreneurial Competencies (EC). The research distributed a Google Forms survey, which received responses from 1,020 participants, where 595 usable responses were included in the analysis. The data preprocessing step verified that every response contained value and each answer received standardization from 1 to 5. The results demonstrate that AI possessed a small direct impact (β = 0.05, p = 0.095) on Business Success (BS) yet demonstrated a significant indirect influence through Engagement (IE) (β = 0.096, p < 0.001), which indicated partial mediation. AI’s direct relationship to Entrepreneurial Competencies (β = 0.084, p = 0.027) recorded better effects through Institution Engagement (IE) (β = 0.02, p = 0.018). The study demonstrates that institutional backing plays an essential part in enhancing both business and entrepreneurial outcomes driven by artificial intelligence. Research findings indicate institutions should increase their support policies because this strengthens AI’s contributions across educational and business sectors.