An Introduction to Link Share
Inbound links (links coming back to your page from other sites) are counted by search engines and considered as valuable. The more inbound links the better your link share. Google is more sophisticated in how it measures the value of these links and there are a number of factors used to determine the relative weight of a link. For instance, a link back from a site related to your topic is worth more than a generic, unrelated link. Likewise a link back from a .edu or a .gov site passes on more value. A reciprocal link is not worth as much as a one way link.
Link share is used by Google as a major factor in determining if yours is a "trusted" site. This measure of trust is expressed in something they call Page Rank or PR. PR runs from zero to 10, with 10 being the highest possible rank. It is very difficult to get a PR of 10 from Google. Outbound links from your page pass value on to the website being linked to. Google doesn't penalize a site for using outbound links, especially if those links are going to sites that are related to your topic. On the other hand however, outbound links will dilute the value of your inbound links and thus decrease or delay your Google Page Rank.
It is more complicated than this, but let's say you have 100 inbound links to your home page and you have 50 outbound links to other websites from your home page, then your link share might diluted by 50%. If your outbound links are going from a different page then they do not directly affect the value of the inbound links coming to your home page. That's the reason many sites have pages specifically for outbound links rather than placing them on the home page. You will still be passing on link value to those other websites because Google will count your link as part of their link share. The link to them will not be as valuable as it would be from your home page but it will still pass on some value. Google recognizes links from a home page as worth more.
Even though one way links are worth more, sometimes reciprocal linking can be worth your while. Its a good way to get started with your link building and theres a good argument that reciprocal links are better than no links at all. There is a catch, though. If you do exchange links, make sure that they are with sites that are related to your business or topic. Topical links are generally preferable to unrelated links because, once again, this reinforces the relevancy of a page. Its all about relevance, especially with Google.
Think of your website as being a member of a community, related and joined together and built around a system of shared resources and values. Unique content that is relevant to your community's interests will be recognized as a valuable resource. Your peers will recognize you and point others in your direction. Those links will be registered as "votes of confidence" and enough votes will eventually gain you a page rank, which is Googles way of telling the world that you are a trusted member of the internet community.