Diversified supply chain with a relatively wide and disperse range of partners has been widely recognized as a strategy to expand business, improve resilience, and buffer risks. However, notable technological disruptions including the application of generative AI in business has reshaped the way in managing supply chains, and recent global turmoil such as the COVID-19 pandemic and the tense geopolitical relationship has evoked the growing debate over the trade-offs associated with supply chain concentration and diversification for firms’ decision making as their businesses grow. Firms often adjust their supplier and customer base to withstand disruptions caused by the dynamism in business environment. In this study, we examine how the two types of firms’ perk consumptions (i.e., inward & outward non-monetary compensations) moderate the relationship between their supply chain diversification and financial and operational performance respectively. By utilizing data of 3,955 firms listed in China with 23,737 firm-year observations, we find that firms’ use of outward perk consumptions positively moderates the negative relationship between supply chain diversification and financial performance, albeit the negative effect of supply chain diversification on operational performance is positively moderated by inward perk consumptions. We further find that firms with more diversified supply chains tend to possess lower downside and default risk. Our findings contribute to the literature by revealing the interplay among supply chain structure, compensating system, and corporate performance. Our work also offers practical implications for practitioners pursuing OM and SCM strategies.