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This paper introduced concept of modularity business process. High modular business processes have properties of encapsulation and plug-and-play, which make business process more flexible and responsible to environment change. We also proposed a mechanism model of business process modularity and hypothesizes based on modular system theory and transaction cost economics. Diversity of customer demand and supplier specialization will lead to modular design of business process. Physical assets specificity, human assets specificity and procedure assets specificity of business process will decrease the attractiveness of modularity business process. Empirical results support these hypothesizes.