The Map Document Properties dialog box contains fields and options
that help you make your map document more usable. This dialog box also
displays times when the document was last saved, last printed, or last
exported.
From ArcMap, click File > Map Document Properties. From ArcCatalog or
the Catalog window, right-click the map document in the tree view and
click Properties.
You can define how path references are maintained in your document by
checking or unchecking Store relative pathnames to data source. If
this box is checked, paths are stored as incomplete paths that are
relative to the current location of this document on disk. Using
relative paths makes the map document more easily portable because
ArcGIS will resolve the paths to the document's data sources relative
to the document's current location in the file system rather than by
full paths that include a drive letter or machine name.
Using relative paths doesn't mean that the layers in your document
will never need repairing. Even with relative paths, it is still
possible for a document to be unable to find its data sources if the
document or the data sources are moved to a different location
relative to each other, such as to a different part of the folder
hierarchy or to a different disk.
This setting only applies to how the document references file-based
data (such as file geodatabases, shapefiles, coverages, and raster
files) and data in personal geodatabases. It has no effect on how the
document references data on servers. Layers representing data and
services on these servers reference them directly by server name
rather than via paths.
This property can't be changed if you accessed this dialog box by
right-clicking a document in the Catalog window (unless the document
you right-clicked is the current document you have open in the
application) or in ArcCatalog.