Trust, Hope, and Long-Term Investment
Small Business Owners' Responses to National Crises
DOI:
https://doi.org/10.64166/cexg9744Abstract
Small and medium-sized business owners in Israel, who constitute a central pillar of the local economy, are required to make significant investment decisions under an unprecedented sequence of crises: from a global pandemic to an ongoing war. This study examines the institutional trust of business owners not merely as a political stance, but as a critical psycho-social resource that shapes their willingness to invest in the future of their business. Using a mixed-methods research design, I examined the entrepreneurial experience at two distinct points in time: first, a qualitative analysis of 74 in-depth interviews was conducted, followed by a comparative quantitative analysis of two separate surveys: one from the COVID-19 crisis (N=489) and one from the Iron Swords War (N=363). The qualitative findings reveal that institutional trust is eroded during a crisis primarily due to a perceived loss of legitimacy in institutional decision-making and a sense that the "social contract" between businesses and the state has been violated ת rather than a perception of professional incompetence on the part of state institutions. At the quantitative level, separate analyses of the two surveys revealed a consistent pattern in which institutional trust is directly associated with psychological indicators of reduced stress and uncertainty. However, a unique finding examined in the Iron Swords War sample indicates that institutional trust also predicts business owners' willingness to invest long-term, and that this relationship is mediated by the emotion of hope. The central policy conclusion is that a financial safety net is insufficient; in order to encourage growth and business activity during a prolonged crisis, the state must act with transparency and fairness that build hope as this is the psychological engine that drives business owners to identify and capitalize on long-term economic opportunities and investments.
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