In a note posted online, Yahoo! said some work qualities are enhanced by having employees in the same location.
"Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people and impromptu team meetings. Speed and quality are often sacrificed when we work from home," the posting said.
The New York Times reported Tuesday that analysts studying the issue have concluded that innovation improves when workers interact with each other but productivity goes up when they work from home.
"If you want innovation, then you need interaction. If you want productivity, then you want people working from home," said John Sullivan, a professor of management at San Francisco State University.
Besides the loss of innovation, "A lot of companies are afraid to let their workers work from home some of the time or all of the time because they're afraid they'll lose control," said John Challenger, chief executive of Challenger Gray & Christmas, an outplacement and executive employment agency.
But some see irony in Yahoo!'s decision. Chief Executive Officer Marissa Mayer was hired from Google when she was 37 and pregnant, leaving many to believe she would be an advocate for flexible work arrangements.
Secondly, Yahoo! is a child of Silicon Valley and an Internet company, which is in a large way responsible for the cultural switch that allows, the Bureau of Labor Statistics says, 24 percent of workers to do at least part of their jobs from home.
Mayer, however, is following Google and Facebook on this, the Times said.
Both of those technology firms prefer workers to work at company offices, although some work from home on a "case-by-case basis," the Times said.