A Google search for "Institutionalization of children" turns up a lot of results on this topic. One of the top results is this from the University of Pittsburgh, which summarizes current knowledge with a number of further references.
The details vary with when and where the orphanage is, but at the very least a child is likely to be deprived of real parental love and affection, which will make it hard to form relationships in later life. They will also lack support and encouragement in school, and generally are thrown on their own resources much more than children in a family. Once they are old enough to leave the orphanage they are likely to be expected to jump straight into an adult life for which they have little preparation and no safety net if they screw up (find a job, rent a room, go shopping, cook for yourself, get a bank account, manage money ...)
At the worst end of course there are lots of cases of institutional neglect, abuse and exploitation.