Abstract: This article focuses on the contradiction between the business operation and legal identity of new R&D institutions, and constructs a theoretical analysis framework of “legal identity-action environment-organizational behavior-organizational performance” to explore the internal mechanism of the contradiction’s impact on the operational performance of institutions. The article uses the data from the Ministry of Science and Technology’s survey of 2412 new R&D institutions nationwide in 2022 to empirically test the theoretical analysis conclusions. Overall, new R&D institutions, based on the diverse business operation requirements defined by the “Law of Scientific and Technological Progress,” have the attributes of public welfare and market hybridity, while based on the provisions of the “Civil Code” regarding legal identity, they only have a single attribute of public welfare or market. There exists a contradiction between the two. This contradiction constrains the development of the diverse business of new R&D institutions, and may lead to the possibility of these institutions deviating from their original functional positioning and returning to a single-functional attribute organization. The government should focus on the long-term, healthy, and sustainable development of the new R&D institutions, carry out institutional innovation, and construct targeted regulatory norms and systematic support policies based on the functional positioning and the consideration of the public welfare and market attributes of these institutions.