Abstract: This study explores how micro,small,and medium-sized enterprise (MSME) entrepreneurs respond to external crises and the psychological implications of their strategies. While prior research predominantly focuses on firm-level responses to crises,this study highlights the unique challenges faced by MSME entrepreneurs,whose personal resources,decision-making processes,and well-being are closely intertwined with their firms’ crisis responses. Understanding these dynamics is crucial given MSMEs’significant role in the global economy and their heightened vulnerability during crises. The research provides insights into how entrepreneurs make strategic decisions under pressure and how these decisions affect their mental health,filling an important gap in the literature on adversity and entrepreneurship. Drawing on the Conservation of Resources (COR) theory,the study distinguishes two primary adaptation strategies:investment-oriented and conservation-oriented approaches. Investment-oriented adaptation involves actively investing resources,such as launching new initiatives or adopting innovative technologies,to mitigate the effects of the crisis and create value. Conservation-oriented adaptation,on the other hand,focuses on reducing costs and conserving existing resources,such as scaling down operations or cutting employee hours,to survive the crisis. The researchers hypothesized that resource availability,such as higher educational levels,innovation experience,and government relief benefits,would drive investment-oriented adaptation,while resource loss,particularly the adverse impacts of the crisis,would lead to conservation-oriented adaptation. Additionally,the study predicted that conservation-oriented strategies would be more strongly associated with anxiety than investment-oriented strategies,reflecting the greater psychological toll of managing resource depletion. To test these hypotheses,the research employed two complementary studies. Study 1 used a time-lagged survey of Chinese MSME entrepreneurs during the COVID-19 pandemic,utilizing archival data collected before and after the outbreak. This study provided a detailed understanding of entrepreneurs’ responses within a single crisis context. Study 2 expanded on these findings by surveying entrepreneurs from multiple countries who faced various crises,such as economic downturns and natural disasters. This broader approach allowed the researchers to examine the generalizability of their model across different cultural and economic contexts,enhancing the robustness of their findings. The results revealed distinct predictors for the two adaptation strategies. Investment-oriented adaptation was positively influenced by resources such as innovation experience,higher educational levels,and government relief benefits. In contrast,conservation-oriented adaptation was driven by resource loss,particularly the adverse impacts of the crisis. These findings emphasize that the two strategies are governed by different mechanisms,underscoring the relevance of COR theory in understanding entrepreneurs’ responses to crises. Additionally,the findings suggest that multiple factors must be considered to fully explain why entrepreneurs adopt specific adaptation strategies during crises. The study also investigated the impact of these strategies on entrepreneurial anxiety. Both investment-oriented and conservation-oriented adaptations were associated with heightened anxiety,but the psychological strain was more pronounced for conservation-oriented strategies. This aligns with the idea that focusing on resource depletion and cost-cutting may exacerbate stress,whereas investment-oriented approaches may provide a sense of purpose and control. These findings offer valuable insights into the mental health challenges confronted by entrepreneurs during crises and highlight the importance of considering psychological outcomes when evaluating adaptation strategies. Interestingly,some predictors did not perform as expected. Entrepreneurial experience was not significantly related to investment-oriented adaptation in either study,potentially because external crises like the COVID-19 pandemic involve unprecedented challenges that render prior experience less relevant. Similarly,financial resources did not significantly predict investment-oriented adaptation,possibly because entrepreneurs with substantial financial resources may feel less urgency to act proactively. These non-significant findings highlight the need for future research to explore moderators and alternative explanations,as well as to consider the context-specific nature of crises. The two studies demonstrated consistent findings for some variables,reinforcing the validity of the theoretical framework. Innovation experience and the adverse impact of crises emerged as robust predictors of adaptation strategies across different types and contexts of crises. However,there were also contextual variations. For instance,the effects of educational levels and government relief benefits on investment-oriented adaptation were significant in Study 1 but not in Study 2,suggesting that these relationships may depend on the type and context of the crisis. The study has important implications for theory and practice. Theoretically,it advances the literature on adversity and entrepreneurship by integrating COR theory to explain entrepreneurs’ crisis responses,providing a nuanced understanding of how resource availability and loss drive distinct adaptation strategies.Practically,the findings highlight the importance of resource accumulation during stable periods to enable investment-oriented responses in crises. Entrepreneurs should focus on continuous innovation and enhancing their educational qualifications or those of their decision-making teams to prepare for unforeseen challenges. Policymakers can play a crucial role by providing targeted relief benefits and fostering innovation-friendly environments to support entrepreneurs during crises. Moreover,addressing the mental health challenges associated with conservation-oriented strategies through community and governmental support programs can complement resource-focused interventions,ensuring a holistic approach to helping entrepreneurs and their firms navigate crises.