As Hayes (2022) notes, the technical challenges associated with conducting moderation analyses using latent variables make such analyses impractical—if not impossible, in my experience. This has led to the common practice of estimating direct (or main) effects and mediation relationships using latent variables, while conducting moderation analyses at the observed-variable level.
Recently, however, I have encountered several critiques of this practice, primarily asserting that it is invalid. Yet, I find no strong methodological basis for outright rejecting this approach. Hayes (2022) has already challenged the previously held assumption that statistically significant direct and indirect effects are prerequisites for conducting mediation, moderation, or moderated mediation analyses. This suggests that the analyses of direct effects, mediation, and moderation involve conceptually and technically distinct processes.
Given this, I wonder why using different methods to address fundamentally different analytical questions would be problematic.
References:
Hayes, Andrew F. (2022): Introduction to mediation, moderation, and conditional process analysis. A regression-based approach. Third edition. New York NY: The Guilford Press (Methodology in the social sciences).