Problem: Exporting to PDF or Adobe format increases scale of inserted Microsoft Word documents
When exporting to the Portable Document Format (PDF) or the Adobe Illustrator (AI) format, an inserted Microsoft Word document is scaled much larger than expected, and its contents are clipped.
This is a known limit.
Solution or Workaround
As a workaround, use the Encapsulated PostScript (EPS) exporter.
This problem has been resolved for PDF export with ArcGIS 8.1.2, but not for the Adobe Illustrator exporter