Generalizations are risky as always. I don't think it's clear that splitting employees into small, self-sufficient groups correlates to a dip in productivity regardless of whether any/all of the employees have "integrity" or not (if I understood you correctly, you're stating that splitting into small groups may not work if "integrity" is not present).

I put integrity in quotes because the very concept is pretty nebulous, especially when crossing country boundaries. But, I can concede there's at least a general understanding of the word, and I can't say that's what motivates people to do good work/be productive.

At the very least, it's not the only carrot, and you're completely forgetting the stick (which of course, is discouraged these days, but it definitely has it's uses).