Businesses don't like to be suddenly subject to some random localities laws, especially not if that means they're accidentally in violation (eg, not paying income tax to the correct authority, having employees perform work on the wrong visa or without a permit, etc).

There's usually tax implications for working for an extended period of time in another country. As a result, big companies may require employees moving to a new country to negotiate a new job offer for a regional office and smaller companies might not be able to handle the tax laws at all.

Some industries may also run into legal issues if an employee working in another country has to access data that is not allowed to cross country lines.

There are many scenarios where compliance or other requirements require data to be resident in a particular locale, or specific controls. Some companies even provide loaner devices if you cross a customs boundary.

Also HR issues. If you're working in France for a US company, are you subject to French employment law?

Yes many companies have rules about which countries their employees are allowed to work in. Some countries are deemed High Risk (hard to extradite for one example).

This happened to someone a few years back at my current employer. There are pretty much always tax implications that the company will be required to deal with, and there are sometimes other legal issues.

Or the employee is violating the terms of the visa under which they're in that country.