More is Not Always Better: The Impact of Information Diversity on Firms’ Fulfillment Performance

As digital technologies advance, many companies can easily collect various types of information, such as sales, orders, production planning, and inventory planning, through information sharing to enhance their operational performance. However, the increase in information diversity (the variety of information shared) could lead to two opposing outcomes: an improvement in decision-making that boosts fulfillment performance and an information overload that hampers it. The impact of this tradeoff between these two effects on firms’ fulfillment performance remains unclear. This study empirically investigates how information diversity affects firms’ fulfillment performance and how firms’ process management capabilities (PMC) moderate this relationship. Leveraging a proprietary dataset from a leading Chinese e-commerce platform — encompassing 84 suppliers across 339 product categories — this research employs a fixed-effects least squares model to empirically test hypotheses. The results indicate that while fulfillment performance improves with information diversity, too much diversity can negatively impact performance, resulting in an inverted U-shaped relationship. Notably, firms with strong PMC can achieve better performance at higher levels of information diversity by taking greater advantage of information diversity and mitigating the effects of information overload. Our findings challenge conventional wisdom: when information diversity exceeds optimal thresholds, fulfillment performance declines despite improved decision inputs. Practitioners should balance information-sharing benefits against overload-induced efficiency losses.