The instability of the business environment and poor performance of employees in the hospitality industry has become a major challenge that most hotels struggle with. In their effort to contain this, hotels are now seeking to identify the root cause to the problem, a realisation that drives them to the growing need for Knowledge Management (KM). This paper is drawn upon a study that sought to examine the influence of knowledge creation on the performance of employees in two-star hotels in Eldoret, Kenya. Guided by the knowledge spiral theory as developed by Nonaka and Takeuchi, the authors employed use of cross-sectional research design. Human Resource Managers (HRMs) and employees made up the target population of 477 from which a sample of 148 respondents were drawn. Seven 2-star hotels in Eldoret town based on the Kenya Gazette September, 2015 hotel classification by the Tourism Regulation Authority participated in the study. The sample size was obtained using census method for 7 HRMs and proportionate convenience sampling for 141 employees. A questionnaire guide was used for data collection after testing for reliability and validity in a pilot study. Analysis of the collected data was then done by descriptive statistics in form of frequencies, percentages, mean and standard deviation; and presented in tables. Inferential statistics was also used to conduct a multiple regression analysis to describe the relationship between the independent and dependent variables. The study findings indicated that knowledge creation (β=0.325, p=.010) has a significantly positive influence on employee performance. The study recommends that hotels adopt a policy to embrace the knowledge economy by creating more knowledge that can be used by employees to improve their performance.

Keywords: Knowledge creation, Employee performance, Cross-sectional research design, Two-star hotels, Kenya