This work contributes to advancement of the theory of human capital allocation and development by examining of relation between human capital employment modes and firm performance. Using the resource orchestration and HR architecture framework, this paper conceptualizes the contribution of external human capital in alliance employment mode to competitive advantage. We suggest that the relationship between the alliance employment mode and firm performance depends on the characteristics of external human capital flows: the volume of human capital stocks engaged in interaction and the half-life of specialized knowledge. Selected cases from hospitality industry, intensive in human capital, illustrate attributes how alliance employment mode can vary and when they may provide the necessary value isolating mechanisms for competitive advantage. When external human capital has the characteristics cited, an alliance employment mode can contribute to competitive advantage. In the contrary case, the conditions are insufficient for alliance employment mode to become a source of superior firm performance.
