This paper studies the spatial organization of firms, both theoretically and empirically. Two new facts in Danish register data motivate the analysis. First, firms have become more fragmented over time. Second, headquarters (HQ) establishments have become moremanager intensive, despite a significant increase in managerial wages at HQ locations. We study the roles of spatial wage disparities and communication costs in explaining these two trends. Immigration shocks are the source of identifying variation for changes in relative labor supply. We estimate elasticities of substitution across establishments within firms of 3.5 for workers and 0 for managers. Estimates indicate that increases in the wage of managers at the HQ relative to non-HQ locations, explain 66% of the increase in HQ managerial intensity. This can be explained by the associated increasing demand for headquarter services and managerial knowledge as satellite establishments become larger.