PurposeThis study aims to test the relationship between knowledge sharing and employee engagement. In particular, the mediating and moderating roles of competency development and social climate, respectively, are also the focus of this research.Design/methodology/approachOf self-completed questionnaires collected from luxury hotels in India, 507 are usable for data analysis. The structural equation modelling (SEM) was used to examine the proposed hypotheses.FindingsThe structural equation modeling–based results illustrate a positive significant association between knowledge sharing and employee engagement. Also, there is a significant support to establish the mediating effect of competency development and the moderating effect of social climate on this relationship. The expansion of competencies of employees achieved through knowledge sharing leads to higher engagement.Research limitations/implicationsThis work is carried out in Indian hospitality sector and may not be generalizable to other cultural settings.Practical implicationsThis study’s results add to the knowledge sharing scholarship by envisaging a possible association with an employee attitudinal outcome, i.e. employee engagement.Originality/valueTo the best of the authors’ knowledge, this is one of the first studies to unravel the social processes through which knowledge sharing enhances competency development, and subsequently employee engagement, mainly through the influence of social climate.