Introduction
Corporate governance refers to the system of rules, practices, and processes by which companies are directed and controlled. A strong corporate governance framework ensures that companies are accountable, transparent, and fair to their stakeholders — including shareholders, employees, customers, and the community.
Different countries adopt various corporate governance models based on their legal systems, economic structures, and cultural values. This article explores some of the leading frameworks across the world.
1. Anglo-American Model (Shareholder-Oriented Model)
Countries: United States, United Kingdom, Canada, Australia
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Key Characteristics:
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Focuses on maximizing shareholder value
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Strong role for capital markets
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Separation between ownership and management
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Boards are typically independent and composed of non-executive directors
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Strengths:
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Promotes efficiency and innovation
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Clear accountability to shareholders
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Challenges:
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May neglect stakeholder interests like employees or the environment
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Short-termism due to quarterly performance pressure
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2. Continental European Model (Stakeholder-Oriented Model)
Countries: Germany, France, Netherlands
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Key Characteristics:
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Focus on broader stakeholder interests (e.g., employees, creditors)
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Dual-board structure (Management Board & Supervisory Board)
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Strong labor participation in decision-making
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Strengths:
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Long-term strategic focus
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Balances economic and social goals
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Challenges:
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Slower decision-making
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Less flexible in dynamic markets
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3. Japanese Model (Keiretsu System)
Country: Japan
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Key Characteristics:
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Companies often part of large business groups (keiretsu)
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Cross-shareholding among firms
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Main banks play a central governance role
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Consensus-driven decision-making
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Strengths:
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Stability and long-term growth
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Strong internal relationships and cooperation
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Challenges:
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Lower transparency
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Limited outside shareholder influence
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4. Chinese Model (State-Involved Governance)
Country: China
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Key Characteristics:
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Dominance of state-owned enterprises (SOEs)
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Governance often influenced by government and party leadership
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Gradual integration of international practices
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Strengths:
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Policy alignment with national goals
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Access to state support
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Challenges:
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Weak minority shareholder protection
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Risk of political interference
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5. Islamic Corporate Governance Model
Countries: Gulf countries, Malaysia, parts of Southeast Asia
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Key Characteristics:
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Based on Shariah (Islamic law) principles
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Ethical and socially responsible investing
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Shariah Supervisory Boards ensure compliance
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Strengths:
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Promotes ethical practices and risk-sharing
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Strong religious and moral accountability
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Challenges:
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Complexity of dual compliance (financial + religious)
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Variability in interpretation across jurisdictions
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Conclusion
Corporate governance frameworks vary widely across the globe, reflecting different legal traditions and economic priorities. However, the global trend is moving toward greater transparency, stakeholder engagement, and accountability. Businesses that adopt strong governance practices tend to be more sustainable, trusted, and resilient in the long term.