We develop a model to analyse the pattern of R& network formation when unions have relative preferences over wages and employment. Within a threefirm industry, weshow that when the unions place a low weight on wages and technological spillovers are low, a partial R& network that includes two firms but excludes the third emergesin equilibrium. In contrast, when the unions care a lot about wages, a complete R& network that includes all firms emerges. For all other intermediate levels of unionpreferences over wages, there is no strong stable equilibrium network. Empirical implications emerge from these findings, which are also discussed.