Google doesn’t always take kindly to reciprocal links eg you link to a website in exchange for a link back to you. The patterns can easily be found and these type of links don’t necessarily mean that each site is recommending the other as a valuable source of good info, which is what Google is seeking in linkjuice being passed.
Randfish looks at this problem in the comments section in his recent blogpost about the 12 common errors of SEO, and suggests comparing these two pages to understand why and when Google might penalise for reciprocal links.
A good reciprocal links page from Microsoft
As you can see, in the first instance it makes sense to, for instance, link to your suppliers or partners whose sites are offering further valuable content for the target audience, and Google is unlikely to penalise this. Just as Google is unlikely to penalise a link on this blog referencing another site, which in turn generates a link on that blog back here.
However, in the second example, it is just a list of places that sell similar products and have given reciprocal links, each of which contains pretty similar info and the purpose of the reciprocal link is not to provide valuable research material for searchers but to encourage people to shop at those websites. In other words, the second example is more like a mini shopping directory rather than a useful resource.
When seeking reciprocal links, it is a good idea to think about how you are going to present them on your website. For instance, you could include links in context, as happens in many blog posts, or have relevant links at the end of articles.
However, you choose to do it, it is important to steer clear of a Links page on your site that is all reciprocals. Far better to produce great content and get links naturally from people who like your content. If they have chosen to link to you without being asked, you do not need to offer a reciprocal. However, it may well be that if you look at their site, there is particular content that you know will be of interest to your website audience, so you can include a link to that specific content without it being viewed by the search engines as a non-valuable reciprocal hidden in a massive list.