Abstract
On 7 October 2023, Israel experienced a large-scale attack, initiating the Iron Swords War (also known internationally as the 2023 Israel-Hamas War). This protracted armed conflict profoundly disrupted social and economic life in Israel and the region. This study investigates the psychological distress of small business owners in the aftermath of this terrorist assault and during the ensuing conflict. Drawing on a nationwide survey of 363 entrepreneurs, we applied a two-stage higher-order PLS-SEM model to examine how economic stressors, psychological and institutional resources, and demographic factors shaped distress. The findings reveal that uncertainty and revenue loss intensified distress, while resilience, hope, and trust in government operated as protective resources, with notable gender differences also observed. Beyond its economic and psychological relevance, the study situates entrepreneurial distress within a broader public health perspective, viewing the mental health and well-being of small business owners as integral to community resilience, social stability, and national recovery during crises. By framing entrepreneurial distress and resilience as key determinants of population mental health and collective well-being, this research underscores how supporting entrepreneurs contributes to wider health promotion and psychosocial recovery efforts. Overall, the study offers a novel multidimensional empirical analysis of entrepreneurial distress during armed conflict, underscoring the psychological mechanisms through which terrorism and its aftermath affect small business owners, and highlighting the need for resilience-building and institutional support to mitigate mental health burdens.