Risk Taking and Performance of Star Rated Hotels: Does Dynamic Capabilities Matter? Evidence from Kenya’s North Rift Region

Star rated hotels as any modern businesses engage in greater and diverse risk taking which is a critical factor for performance. This is because risk-taking has a significant impact on the performance of individuals and organizations. However, Kenyan hotels have become more complex to manage because of the demands of the dynamic business environment occasioned by complicated service technologies and production processes. In terms of different contexts, the effects of risk-taking propensity are expected to differ in terms of its effect on performance according to the specific context. These altogether called to question the moderating role of dynamic capabilities on the effect of risk taking and performance of star rated hotels. The study used explanatory research design and collected data using a questionnaire. Based on a target population of 575 people (Yamane, 1967), a sample size of 236 employees was used. Data was analysed using inferential and descriptive statistics using SPSS version 25. Risk taking has a positive and significant effect on performance of star rated hotels in North Rift Region, Kenya. Dynamic capabilities significantly moderate the effect of risk taking on performance of star rated hotels. However, with the inclusion of dynamic capabilities as a moderator there was heightened performance of the star rated hotels unlike the direct effect of risk taking. Therefore risk-based thinking is integral and star rated hotels should embrace strategic enterprise risk management as a firm-wide strategy to identify and prepare for hazards with their finances, operations, and objectives for maximal performance.