This study investigates the impact of critical resources on the international expansion of emerging market firms (EM firms). We argue that institution-based critical resources prevent EM firms from expanding into advanced economies. Institution-based critical resources are resources that firms develop to respond to a country's institutional environment. EM firms develop this type of resource to fill institutional voids in a country. The differences in the environmental conditions and institutional frameworks between emerging markets and advanced economies raise significant difficulties for EM firms to transfer their institution-based critical resources to advanced economies, and in turn, encourage firms to improve their current paths and remain in their domestic markets or expand into other developing countries, where the institutional environments are similar to those of their home markets.