As firms move toward globalized strategies, substantial opportunities are occurring in developing countries. In itself, exporting to developing countries is difficult for US firms as they attempt to modify their products and marketing messages for unfamiliar territory. One thing marketers are learning is that there is no “silver bullet” that applies to all developing countries; each has a unique set of cultural, political, and legal differences that pose challenges.

Our study focused on the developing countries of Eastern Europe. Markets in countries such as Romania, Hungary, Bulgaria, and Poland are growing as they embrace democratic governments and the free market economies that accompany them. The key challenge in exporting to Eastern Europe, exporters have found, is that countries in transition from controlled economies to open markets have very volatile legal and regulatory systems, making it difficult for exporters to have confidence that their interests will be protected. This is because, historically, foreign legal systems are designed to protect home country firms.  When the regulatory system is stable this does not create a large problem, as long as the exporter understands what it is dealing with. However, volatile systems, where the rules are being rewritten and reinterpreted, add a great deal of risk to the relationship.

To understand these issues better we took a sample of US firms that actively export to Eastern Europe.  We were interested in finding out more about how exporters dealt with regulatory and legal challenges and other challenges as well. More specifically, we wanted to know the extent that regulatory issues affected the performance of exporters. In short we found that exporters reacted to volatile legal environments by dealing with their import partners in more formal, less relational ways. Unfortunately, this had negative influences on performance outcomes, as might be expected. On the other hand, firms that were able to deal less coercively generally were rewarded with positive outcomes.