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Organizational transparency has been identified as an essential principle for organizations to adopt since it enables organizational agility and digital innovation capability, which have become crucial for companies to handle today's volatile digital market. Startups seem to embrace transparency, but there is little empirical evidence in the literature describing how startups use transparency to develop their organizational agility and increase their digital innovation capability. We conducted a qualitative study based on 23 semi-structured interviews on nine globally active automotive startups to understand how organizational transparency strengthens digital innovation capability. The result shows that in the cases where transparency enables trusting relationships and commitment between employees and across company borders, transparency can strengthen the startups' digital innovation capability and making more use of people's creativity. We conclude that startups that apply an external transparency strategy to open innovation can enhance their digital innovation pace and the likelihood of market success.



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