Are Dualistic Models the Way to go for Corporate Governance?
Christian Bongiorno
A proper method of governance at the corporate level is vital for a company to establish a framework for success and balance stakeholder interest. Dan Byrne from the Corporate Governance Institute provides key ideas that make corporate governance effective:
Fairness – Boards must treat every stakeholder equally to promote fairness.
Accountability – The higher ups must answer for their actions and be prepared to explain their choices.
Transparency – Executives should be honest with all stakeholders, exchanging timely information on company finances.
Disclosure – Executives must keep stakeholders in the loop about crucial company updates.
Awareness – Boards should stay aware of company risks.
Impartiality – Executive decisions should be made away from personal interests.
According to Newsweek, Hewlett Packard (HP) was ranked as America’s most responsible company in 2023 (Rani 2023); HP had excellent environmental and social scores, while having a respectable corporate governance score. A corporate governance score serves as an assessment of the effectiveness of a company’s governance practices. HP’s score (84.93) reflects the effort of their executives on establish their long-term vision; HP aims to reduce Scope 1 and 2 emissions to achieve net zero emissions by 2040 (Grant 2024). In addition, HP is committed to maintaining social relations through CSR commitments and has a racial equality and social justice task force. The company runs on a dualistic governance model – this model is a two-tiered board structure where the supervisory board peers over a company’s management, while the management board is responsible for day-to-day operations.
Dualistic governance models are prominent in European countries – countries include Germany, Austria, Finland and Denmark (Jungmann 2008, 1). German stock corporations mandated a two-tiered board system to distinguish the functions of management. (Du Plessis 2004, 1139). Specifically, this mandate arose from governance codes that companies needed to comply to.
Shall (soll) - Consists of the code’s core recommendations for corporations.
Should (sollte) or can (kann) - These phrases are recommended for effective corporate governance, but corporations don’t need to explain if these aren’t followed.
‘Communication function’ - The remaining provisions, helps explains the code’s legal requirements in a reader-friendly way.
This is the first part of the code and it provides framework for legislation. (Du Plessis 2004, 1144)
Opponents to this model argue that there would be more bureaucracy and priority issues. Bureaucracy is increased because of the two separate boards overseeing a company, meaning that there are more board members that need to be involved in executive decisions. In addition, priority issues would arise due to the conflicting interests between boards.
However, Dr. Carsten Jungmann from the University of Dusseldorf describes recommendations that national governments should take to improve dualistic models – strengthen the supervisory board chairman’s position, professionalizing the roles of the other members on the supervisory board and increasing the supervisory board’s involvement in managerial decisions (Jungmann 2008, 12-15). Dualistic models already witness chairmen in this position playing roles in management, but Jungmann suggests that chairmen should be independent from the board so they can make decisions based on their access to crucial information, enabling them to make effective decisions.
Monistic governance models are direct opposites from dualistic models – these models consist of a single board that houses both management and supervisors. Some benefits include direct communication between directors and non-executives feel more included in the business; Apple utilizes the monistic model to oversee the company and manage corporate affairs. Monistic models are dominant in Anglo-Saxon countries (United States and United Kingdom) since it’s easy to distinguish between the supervisors and management. The major drawback to implementing this model is that the board is responsible for both the management and supervisors, leading to delayed decision making (Jungmann 2008, 10). Specifically, boards in monistic models need to multitask between professional relationships and colleague management to achieve effective management. According to Jungmann, making board meetings more frequent and reducing the number of directors in a company would help establish clear boundaries between management and control.
Despite not being a unanimous winner, monistic governance models are preferred over dualistic models because of effective decision making and relationships between board members.
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Rani, T. (2025) America’s most responsible companies 2023, Newsweek. Available at: https://rankings.newsweek.com/americas-most-responsible-companies-2023 (Accessed: 17 May 2025).
Grant, L. (2024) HP’s sustainability strategy: Promising signs but challenges lie ahead,
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What is a two-tiered board structure? (2024) iBabs. Available at:
https://www.ibabs.com/en/glossary/two-tiered-board-structure/ (Accessed: 22 May 2025).
Cole, S. (2024) Examining & evaluating the two-tier board structure, Board Room Pulse. Available at: https://boardroompulse.com/examining-and-evaluating-the-two-tier-board-structure/ (Accessed: 22 May 2025).
du Plessis, J. (2004) (PDF) the German two-tier board and the German corporate governance code, ResearchGate. Available at: https://www.researchgate.net/publication/284058831_The_German_Two-Tier_Board_and_the_German_Corporate-_Governance_Code (Accessed: 22 May 2025).
Jungmann, C. (2009) The dualism of one-tier and two-tier boards in Europe ... Available at: https://www.disag.unisi.it/sites/st07/files/allegatiparagrafo/12-03-2018/the_dualism_one-tier_and_two-tier_boards_in_europe_2009.pdf (Accessed: 22 May 2025).