In the ranking algorithm of google.com, one of the most important factor is inbound links. This is very simple principle: if page 1 links to page 2 this means that page 1 giving his recommendation to page 2, the more site links to your site, the better your ranking, but you must understand that only large amount of inbound links are not everything, quality of inbound links is important too. Links which contains keyword for which you want to get high ranking is better then link with keyword for example: click here, click or etc.
Inbound links are important factor in search engine optimization, but outgoing links also have some impaction on your web site. Some times links to other web sites showing your visitors that your site can be trusted, of course if you are sending your visitors at page where they can found negative information about your site, you must make attention at quality of web sites you are linking, for example if you link at microsoft.com, or apple.com visitor will associate your site with these high quality sites. You must not be afraid that you are sending visitors to other sites if you don’t make this visitors visitor will go back to search engine, but if you send this visitor to some other sites this sites probably send visitors for return.