To elucidate the paradox between high R&D efficiency and low transformation effect in China, we exploit this setting via two-stage DEA approach to calculate knowledge production efficiency (KPE) and knowledge transformation effect (KTE) at different stages and under different motivations. Using panel data of key universities in China, we conduct empirical analysis with the Fractional Logit model and find that: (1) The innovation motivation, which is the distinction between quantity-orientation and quality-orientation, is the root cause of this paradox; (2) The paradox can be alleviated by government stimulation by providing targeted financial support to high-quality research; (3) Within the imperfect regional market environment and system, the government has greater sway over Chinese research universities than the market does, but both have a limited impact on promoting the conversion of high-quality research results into actual productivity. Our study challenges the conventional wisdom that efficiency and effectiveness have a positive relationship and supports the critical role that research motivations play at different stages of the innovation value chain. It also adds to the body of knowledge on goal-setting theory and the innovation value chain.