Abstract: During R&D outsourcing, the actions of the participants are regulated not only by formal contracts but also by informal contracts which are badly important to the performance of sustaining cooperative R&D. This paper studies the informal governance mechanism, namely relational contracts, in R&D outsourcing by a repeated game model based on the concept of relational contracts. According to the result, the symmetric relational contract between the principal and agent depends only on the fluctuation of the targeted innovation' value and has nothing to do with the agent's characteristic parameters such as the R&D productivity and the private marginal cost. The theoretical conclusion can contribute greatly to the design of relational contracts for R&D outsourcing.

Key words: R&D outsourcing, relational contracts, reputation